Evaluating the Spin-Off Readiness of Sharia Business Units for Islamic Banking Expansion in Indonesia
DOI:
https://doi.org/10.21580/economica.2024.15.2.22696Keywords:
Capital Adequacy, Islamic Banking, Readiness, Sharia Business Units, Spin-OffAbstract
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.
Downloads
References
Agustina, T., Sinaga, B. N. P. D., Siburian, K., & Murni, P. T. (2018). ANALISIS YURIDIS SPIN OFF DALAM PERUSAHAAN MENURUT PERSEROAN TERBATAS. 07(3), 240–251.
Aun, S., Rizvi, R., Kumar, P., Sakti, A., & Syarifuddin, F. (2020). Role of Islamic banks in Indonesian banking industry : an empirical exploration. Pacific-Basin Finance Journal, 62(October 2018), 101117. https://doi.org/10.1016/j.pacfin.2019.02.002
Beekun, R. I., & Badawi, J. A. (2005). Balancing Ethical Responsibility among Multiple Organizational Stakeholders : The Islamic Perspective 1. 131–145. https://doi.org/10.1007/s10551-004-8204-5
Brammer, S., Williams, G., & Zinkin, J. (2007). Religion and Attitudes to Corporate Social Responsibility in a Large Cross-Country Sample. 229–243. https://doi.org/10.1007/s10551-006-9136-z
Dusuki, A. W., & Abdullah, N. I. (n.d.). Corporate Social Responsibility.
Fathi Rasyid & Achmad Zaky Syeban. (2018). Analisis kesiapan unit usaha syariah dalam menghadapi kebijakan. Al-Iqtishad, Jurnal Ilmu Ekonomi Syariah (Jurnal Ekonomi Islam), 10(21).
Hafasnuddin, & Majid, M. S. A. (2022). What drives Islamic banking customers’ satisfaction and loyalty: financial or spiritual benefits? Journal of Sustainable Finance and Investment. https://doi.org/10.1080/20430795.2022.2105789
Hamid, W., & Salim, U. (2023). Indonesia ” The effect of Al-Bai ’ and wadiah contracts on Sharia compliance and the Sharia banking system performance through the Maqashid Index in Sharia banks in Indonesia. https://doi.org/10.21511/bbs.14(4).2019.10
Hassan, M. K., Chiaramonte, L., Dreassi, A., Paltrinieri, A., & Piser, S. (2023). Equity costs and risks in emerging markets : Are ESG and Sharia principles complementary ? 77(October 2022). https://doi.org/10.1016/j.pacfin.2022.101904
Khan, F. (2010). Journal of Economic Behavior & Organization How ‘ Islamic ’ is Islamic Banking ? 76, 805–820. https://doi.org/10.1016/j.jebo.2010.09.015
Law of the Republic of Indonesia No. 40 OF 2007. (2007).
M.Rianto Al Arif. (2015). THE EFFECT OF SPIN-OFF POLICY ON FINANCING GROWTH IN INDONESIAN ISLAMIC BANKING INDUSTRY. Al-Ulum, 15(1), 173–184. https://doi.org/http://journal.iaingorontalo.ac.id/index.php/au
Nugroho, L., Badawi, A., & Hidayah, N. (2019). Discourses of sustainable finance implementation in Islamic banks (Case studies in Bank Mandiri Syariah 2018). International Journal of Financial Research, 10(6), 108–117. https://doi.org/10.5430/ijfr.v10n6p108
Nugroho, L., Suganda, A. D., Angga, L. O., Anshary, M., Labetubun, H., Ihwanudin, N., Haerany, A., Anwar, S., Hartono, R., & Anwar, A. (2020). Pengantar Perbankan Syari’ah.
Nur, M., & Al, R. (2023). Spin-off and efficiency in Islamic banks : DEA approach. 8(2), 197–205.
Nur Rianto Al Arif, M., Haribowo, I., & Sutherland, A. (2018). Spin-off policy and efficiency in the Indonesian Islamic banking industry. Banks and Bank Systems, 13(1), 1–10. https://doi.org/10.21511/bbs.13(1).2018.01
Platonova, E. (2013). Corporate Social Responsibility from an Islamic Moral Economy Perspective : A Literature Survey. 2, 272–297.
Rianto et al. (2022). Spin-off policy and efficiency in the Indonesian Islamic banking industry. Banks and Bank Systems, 0–10. https://doi.org/10.21511/bbs.13(1).2018.01
Rianto, M. N., Arif, A., Mufraini, M. A., & Prabowo, M. A. (2020). Market Structure, Spin-Off, and Efficiency : Evidence from Indonesian Islamic Banking Industry Market Structure, Spin-Off and Efficiency : Evidence from. Emerging Markets Finance and Trade, 56(2), 329–337. https://doi.org/10.1080/1540496X.2018.1553162
Rianto, M. N., Arif, A., Nachrowi, N. D., Nasution, M. E., & Mahmud, T. M. Z. (2017). The Islamic Banking Spin-Off : Lessons from Indonesian Islamic Banking Experiences. 30(2), 117–133.
Rice, G. (1999). Islamic Ethics and the Implications for Business. 345–358.
Stefanelli, V., Boscia, V., & Toma, P. (2020). Does knowledge translation drive spin-offs away from the “ valley of death ” ? A nonparametric analysis to support a banking perspective. 58(9), 1985–2009. https://doi.org/10.1108/MD-11-2019-1579
Tarazi, A. (2013). Risk in Islamic Banking *. 2035–2096. https://doi.org/10.1093/rof/rfs041
Trinugroho, I., Santoso, W., Irawanto, R., & Pamungkas, P. (2021a). Research in International Business and Finance: Is spin-off policy an effective way to improve the performance of Islamic banks ? Evidence from Indonesia ⋆. Research in International Business and Finance, 56(November 2020), 101352. https://doi.org/10.1016/j.ribaf.2020.101352
Trinugroho, I., Santoso, W., Irawanto, R., & Pamungkas, P. (2021b). Research in International Business and Finance: Is spin-off policy an effective way to improve the performance of Islamic banks ? Evidence from Indonesia ⋆. 56(November 2020).
Undang-undang No.21 Tahun 2008. (2008). 1998.
Widyastuti, U., Febrian, E., Sutisna, S., & Fitrijanti, T. (2020). Sharia compliance in Sharia mutual funds: A qualitative approach. International Journal of Economics and Business Administration, 8(3), 19–27. https://doi.org/10.35808/ijeba/483
Williams, G., & Zinkin, J. (2010). Islam and CSR : A Study of the Compatibility Between the Tenets of Islam and the UN Global Compact. 519–533. https://doi.org/10.1007/s10551-009-0097-x
Yumanita, D. (n.d.). COMPARING THE EFFICIENCY OF ISLAMIC BANKS IN MALAYSIA AND INDONESIA. April 2007.
Published
Issue
Section
License
Authors who publish with this journal agree to the following terms:
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), acknowledging its initial publication in this journal.
Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and greater citation of published work (See The Effect of Open Access).
