The Performance of Indonesian Islamic Rural Banks During Covid-19 Outbreak: The Role of Diversification

Risfandy, Tastaftiyan; Pratiwi, Desti Indah

doi:10.21098/jimf.v8i3.1564

Cited by 4 publications

(3 citation statements)

References 33 publications

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“…CIR has a negative effect on profitability, meaning that if the CIR is higher or in this case, if Islamic commercial banks are less efficient, the ROA will decrease. This result support the study by Risfandy and Pratiwi (2022).…”

Section: Macroeconomic Variablessupporting

confidence: 93%

Covid-19 and the Performance of Islamic Banks in Indonesia

2022

ijibm

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Covid-19 has an impact on the profitability of Islamic Banks in Indonesia. Islamic banks' profitability in Indonesia tends to decline during a covid-19 outbreak. Although declining, the profitability indicators measured by Return on Asset and Net Operating Margin are more stable than Return on Equity. The average Return on Equity declined sharply in the fourth quarter of 2021. This study aims to analyze the determinants of the profitability of Islamic banks, including internal bank factors and macroeconomic indicators during the covid-19 outbreak. This study uses a quantitative approach with the fixed effect method. This study employs panel data from 8 Islamic commercial banks from 2020q1 to 2021q4. The results show that capital adequacy, disbursed financing, and operational efficiency has a negative and significant effect on the profitability of Islamic banks. Financing risk and bank size have no significant effect on the profitability of Islamic banks. Macroeconomic indicators such as economic growth, inflation, interest rates, and exchange rates have no significant effect on the profitability of Islamic banks. During the covid-19 pandemic, to increase profitability, banks need to reduce the capital and financing provided to customers. On the other hand, to increase profitability, Islamic banks need to reduce unnecessary costs so that income is not eroded. Macroeconomic indicators do not influence the performance of Islamic banks. This shows that Islamic commercial banks are more resistant to economic turbulence.

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Section: Macroeconomic Variablessupporting

confidence: 93%

Covid-19 and the Performance of Islamic Banks in Indonesia

2022

ijibm

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“…While numerous prior studies examine the impact of COVID-19 on the banking industry and its performance, there is limited literature that assesses the effect of COVID-19 on rural banks. Risfandy & Pratiwi (2022) examine the performance of Indonesian Islamic rural banks during the pandemic. However, to the best of the author's knowledge, there is no literature that compares the efficiency of conventional rural banks and Islamic rural banks during the COVID-19 pandemic and examine the determinants.…”

Section: Introductionmentioning

confidence: 99%

Efficiency Comparison between Conventional and Islamic Rural Banks in Sumatra during the COVID-19 Pandemic

Akbar,

Ikhwan,

Riani

2023

MBER

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This study aims to examine and compare the efficiency of conventional rural banks and Islamic rural banks in their roles as intermediary institutions during the COVID-19 pandemic in Sumatra, Indonesia. Furthermore, the efficiency determinants were further analysed to find some variables that affect rural banks’ efficiency. Non-Parametric approach, Data Envelopment Analysis (DEA), and Tobit Regression are employed in this study. The results show that Islamic rural banks have better efficiency performance compared to conventional rural banks, but that there is a fluctuating efficiency trend experienced by both types of rural banks during the observation period. In addition, the potential improvement result indicates that financing and operating revenue variables are the main causes of rural bank inefficiency. Furthermore, the Tobit Regression result finds that capital and bank size significantly improve the efficiency level, but that risk significantly reduces bank efficiency.

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“…This research focuses on Islamic Community Banks (BPRS) because until now, there has been little in-depth research on this institution, making topics surrounding BPRS in Indonesia still very interesting to explore. Although several studies, such as those conducted by Trinugroho et al (2017), Trinugroho et al (2018, Wasiaturrahma et al (2020), and Risfandy and Pratiwi (2022) have discussed about Islamic banks and BPRS in Indonesia, these studies have not explored the topics of banking concentration, banking capital, and banking sector stability. Therefore, this research aims to fill this knowledge gap and provide deeper insight into these issues in the BPRS context.…”

Section: Introductionmentioning

confidence: 99%

Measuring stability in Islamic rural banks: The influence of bank concentration and capital

Pratiwi,

Fadli,

Setyowati

2023

SMBR

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The Islamic Rural Bank, commonly referred to as BPRS in Indonesia, is a vital player in the country's economic landscape, providing limited banking services rooted in Islamic principles. BPRS serves as an economic catalyst across various regions, including both urban and rural areas, thereby shaping the level of concentration, capital ownership, and stability in the financial sector. This study centers its focus on BPRS, a unique financial institution that contributes significantly to the nation's economy. The research, conducted throughout Indonesia in 2020 from the first to the fourth quarter, offers fresh insights into BPRS as a subject of study. By employing quantitative methods, the study endeavors to explore the impact of concentration and capital ownership on the stability of BPRS in Indonesia. Interestingly, the findings in this research suggest that concentration levels don't provide a clear explanation of the relationship between BPRS concentration and stability. On the other hand, BPRS capital ownership is positively and significantly related to stability, indicating that a strong capital base enhances the overall stability of these Islamic rural banks. These results offer valuable insights into the financial dynamics of BPRS in Indonesia, providing essential information for policymakers and stakeholders as BPRS continues to drive the nation's economic development.

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The Performance of Indonesian Islamic Rural Banks During Covid-19 Outbreak: The Role of Diversification

Cited by 4 publications

References 33 publications

Covid-19 and the Performance of Islamic Banks in Indonesia

Covid-19 and the Performance of Islamic Banks in Indonesia

Efficiency Comparison between Conventional and Islamic Rural Banks in Sumatra during the COVID-19 Pandemic

Measuring stability in Islamic rural banks: The influence of bank concentration and capital

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