Evaluating the Spin-Off Readiness of Sharia Business Units for Islamic Banking Expansion in Indonesia

Cita Sary Dja’akum*  -  Universitas Islam Negeri Walisongo Semarang, Universitas Airlangga, Indonesia
Nur Huda  -  Universitas Islam Negeri Walisongo Semarang, Indonesia
Muhamad Nafik Hadi Ryandono  -  Universitas Airlangga, Indonesia
Siti Mujibatun  -  Universitas Islam Negeri Walisongo Semarang, Indonesia
Ach Fatayillah Mursyidi  -  The University of Edinburgh, United Kingdom

(*) Corresponding Author
DOI: 10.21580/economica.2024.15.2.22696

This study aims to evaluate the readiness of Sharia Business Units (SBUs) in Indonesia to undertake the mandated 2023 spin-off, which would result in these units operating independently from their parent banks. The research employs a qualitative approach, with data collected through documentation and literature review. The study focuses on 20 SBUs, which include one unit from a state-owned enterprise (BUMN), 13 units from regionally-owned enterprises (BUMD), and six units from private banks. Findings indicate that approximately 50% of these SBUs are not sufficiently prepared to separate from their parent institutions due to constraints in assets, capital adequacy, and health metrics. This lack of preparedness is compounded by deficiencies in infrastructure and human resources, which collectively affect the financial, operational, and human capital stability of these units. Consequently, the findings suggest that most SBUs are not ready for a spin-off by 2023. Policy implications: The findings underscore the need for regulatory and developmental support to strengthen SBUs prior to spin-off. The study recommends that future policy address the capital and human resource limitations in Islamic banking to ensure successful spin-offs and sustainable growth in the sector.

Keywords: Capital Adequacy; Islamic Banking; Readiness; Sharia Business Units; Spin-Off

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Economica: Jurnal Ekonomi Islam
Published by the Institute of Islamic Economic Research and Development (LP2EI), Faculty of Islamic Economics and Business Universitas Islam Negeri Walisongo Semarang
Jl Prof. Dr. Hamka Kampus III Ngaliyan Semarang 50185
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Website: https://febi.walisongo.ac.id/
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ISSN: 2085-9325 (Print)
ISSN: 2541-4666 (Online)
DOI: 10.21580/economica

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