Does fintech threaten Islamic banking performance in Indonesia?

Fatimah Ath Thahirah  -  Faculty of Economics and Business, Universitas Indonesia, Indonesia
Rahmatina Awaliah Kasri*  -  Faculty of Economics and Business, Universitas Indonesia, Indonesia

(*) Corresponding Author
DOI: 10.21580/jiafr.2023.5.1.13745

Purpose - This study aims to examine the impact of P2P Lending on both conventional and Islamic banking performance in Indonesia.

Method - It uses a panel data regression method with a random effect model, with a sample of 63 conventional banks and 12 Islamic banks in Indonesia during the 2016-2020 period. The dependent variable is ROA, while the independent variable is the number of P2P Lending companies.

Result - The study found that Fintech P2P Lending does not affect the conventional banks’ performance and has a minimal effect on the aggregate banks' performance in Indonesia. However, interestingly, Fintech has a significant positive impact on the Indonesian Islamic banks’ performance. The result is consistent when GMM is used in the robustness model.

Implication - The findings indicate the importance of supporting the development of Fintech, especially Sharia P2P Lending, and collaboration between Fintech and banks to optimize the performance of Indonesia’s financial sector.

Originality - This research is amongst a few studies that examine the relationship between Fintech and banking performance, particularly Islamic banking performance in Indonesia.

Keywords: fintech; P2P lending; bank performance; Islamic bank performance

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Journal of Islamic Accounting and Finance Research
Published by Department of Sharia Accounting, Faculty of Islamic Economics and Business, Universitas Islam Negeri Walisongo Semarang, Indonesia
Jl Prof. Dr. Hamka Kampus III Ngaliyan Semarang 50185
Phone: +62 852-2589-5726
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Email: jiafr@walisongo.ac.id

ISSN: 2715-0429 (Print)
ISSN: 2714-8122 (Online)

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