THE STATE-OWNED ISLAMIC BANKS MERGER: EMPIRICAL EVIDENCE FROM INDONESIA
Hendri Hermawan Adinugraha
UIN K.H. Abdurrahman Wahid Pekalongan, Indonesia hendri.hermawan@uingusdur.ac.id
ABSTRACT
The phenomenon of mergers among state-owned Islamic banks in Indonesia has an important role to strengthen and improve the efficiency of the existing state-owned Islamic banks. However, the success of a merger must be supported by many factors which include analysis of readiness, strategy, and policies. Given this phenomenon, what is the impact and model of the merger of state-owned Islamic banks in Indonesia? The research objective is to describe in detail the merger of State-Owned Islamic Banks in Indonesia. This research adopts a qualitative methodology based on library research. The research was conducted by analyzing theory and practice in-depth about the impact and model of the merger of state-owned Islamic banks in Indonesia in 2021. Research data collection techniques using library research and interviews. Respondents in this study were BSM, BRI Syariah, and BNI Syariah stakeholder representatives. The total number of respondents amounted to nine people. The data analysis technique for this qualitative research is through the process of data collection, data reduction, data display, and conclusion systematically. This study concludes that the merger of state-owned Islamic banks in Indonesia is carried out to increase effectiveness and efficiency in encouraging the development of banking in Indonesia which is larger and has good competitiveness. This merger has proven to be the right step towards creating a bigger Islamic bank in Indonesia and internationally. The real impact of the merger model in Indonesia has been proven to be able to grow the MSME segment in an integrated ecosystem and value chain. The joining of three state-owned Islamic banks which turned into Bank Syariah Indonesia also had a positive impact on customers, employees, and the people of Indonesia. The impact of mergers on the development of the sharia economy has also proven positive because new entities born from the action of this merger model have resulted in the addition of asset values, resources, and capital as drivers of economic growth both nationally and internationally.
Keywords: Merger, Spin-off, and State-owned Islamic banks.
18 INTRODUCTION
Currently, there are several main problems faced by the behavior of state-owned Islamic banks in Indonesia. These problems include limited capital, high cost of funds, and the condition of Islamic banking which generally experiences excess liquidity (Djuminah et al., 2019). These three problems are related to one another and have an impact on the less competitive nature of Islamic banking in general. The limited capital owned by Islamic banks is one of the main problems in developing the Islamic banking industry (Mubarok et al., 2020). In line with the Indonesian Islamic Financial Architecture Masterplan and the Indonesian Islamic Economic Masterplan 2019-2024, this capital issue deserves special attention because of its significant impact on bank business activities (Komite Nasional Keuangan Syariah, 2018). Limited capital is an obstacle when Islamic banks expand their business, especially to the corporate, institutional, or government project financing sectors that require large funds. In addition, Islamic banks with foreign exchange business licenses also need to maintain the net open position ratio which is linked to bank capital.
In a banking framework that is regulated based on risk aspects, capital strength is one of the keys to business success (KNKS, 2019).
Over the past two years, the Islamic finance industry has faced quite complex challenges (Asif Khan et al., 2017; Miskam and Eksan, 2018; Sharif et al., 2020; Binti Ismail and Hassan, 2021). Apart from the impact of the Covid-19 pandemic which has not ended to this day, there has been a national economic slowdown for the past two years which has certainly had an impact on the Islamic finance industry. The Indonesian government and the financial industry are always focused on collaborating to develop quality businesses and services within the Islamic economic ecosystem (Di Bella and Al-Fayoumi, 2016). The Sharia Non-Bank Financial Industry Sector still has too little impact. In addition, the development of the Islamic capital market also needs to be intensified through literacy and by presenting Islamic Investment Banks in Indonesia (“The Islamic Banking Sector,” 2017).
Islamic banks as financial institutions with a very influential role in the country’s economic activities. A bank is a business entity that collects funds in the form of deposits from the public which are then channeled back to the community in the form of loans (Jan et al., 2021). As part of the country’s economic activities, banks have a role in economic growth, as well as in supporting the development and national stability of a country (M. Anwar et al., 2020). The progress of a country can also be measured based on the progress of banking in that country. The more the role of banking in controlling a country, the more developed the country will be. This condition proves that the existence of the banking world in a country is needed (Iswanaji, 2018).
The existence of banking in Indonesia itself is still dominated by conventional banks by charging interest rates for their banking products (Setiawan et al., 2016). However, this banking interest rate turned out to be a weakness in conventional banking. Such as when Indonesia experienced a hurricane crisis in 1998, causing a worsening of Indonesia’s economic conditions due to the high interest paid by banks to customers compared to interest income received from customers or negative spread, as well as the depreciation of the rupiah exchange rate. The 1998 economic and monetary crisis disrupted the economic life of the Indonesian nation, as well as other
19 countries in the Southeast Asian region which were also affected by the crisis. Indonesia is also the longest country in recovering its economic condition. Many conventional banks were also forced into liquidation due to the crisis. This condition has an impact on reducing public trust in national banking (Roubini, 2007).
In contrast to conventional banking, the performance of Islamic banks was relatively superior at that time. This is evidenced by the negative spread that does not occur in Islamic banking, as well as the relatively lower level of problematic financing. This condition occurs because the bank’s return or return on assets does not depend on the high and low-interest rates, so Islamic banks can be more resilient in going through crises (Can and Bocuoglu, 2022). Shocks or shocks faced by Islamic banks can be handled properly and are quite stable when compared to conventional ones (Putri and Rachmawati, 2022).
Looking at data from the Financial Services Authority (OJK), as of December 2021, the market share for Islamic banking is still around 6.7%. This, of course, still has a large gap to the roadmap of the National Sharia Economic and Finance Committee (KNEKS) in 2024 of 20%
market share of the entire Islamic finance industry. Sharia Business Unit (UUS) performance in the last five years has proven to be able to contribute more to the share of its parent bank. The average contribution of the assets of the Top 5 Islamic Business Units (UUS) to their parent bank’s share reaches 14%. This means that if the UUS business model is maintained, it can be relied upon to accelerate the achievement of the target of 20% of national banking assets by 2024 (Al Arif et al., 2018).
If the spin-off obligation is implemented in 2023, around 21 new Islamic Commercial Banks (BUS) will be born with limited capital and limited capabilities (Al Arif et al., 2020). As a result, instead of accelerating market share growth, on the contrary, it makes Islamic banking uncompetitive. This is certainly contrary to the direction of banking consolidation from OJK. On the other hand, the level of service to customers and the public has also deteriorated, because BUS spin-offs with small capital have not been able to provide infrastructure and experts on par with their parent banks. Even so far customers have experienced satisfactory service standards from the parent bank, for example, digital banking services through the super app and internet banking.
Moreover, if added to the pricing adjustments for BUS financing, the spin-off results will be higher due to limited liquidity, expensive sources of funds, and low bank ratings. This condition harmed around 6.5 million UUS customers. If this happens, the aftermath could erode the reputation risk of Islamic banking (Fahmi and Septiarini, 2020).
Next year’s UUS spin-off obligation needs to be reviewed because it could have an impact on weakening the growth of the Islamic banking industry in Indonesia (Trinugroho et al., 2021).
This weakening could occur due to the addition of some entities with relatively small economies of scale so as not to create a fast and rapid financial industry ecosystem. Meanwhile, in a broader context, the current macroeconomic conditions are also not conducive (N. Setyowati, 2019). The main bank of UUS is still focused on maintaining asset quality due to the pandemic and its recovery. In addition to remaining alert to the threat of a potential global recession.
20 The existence of UUS so far has also succeeded in accelerating Islamic banking literacy and inclusion by reaching various groups of customers universally (Basrowi et al., 2020). Through the strategy of Sharia First and Sharia for all, many rational people have made UUS their choice of sharia banking. From the perspective of the sharia financial ecosystem, the existence of UUS is also important. UUS with its parent bank which is included in the Core Capital Bank Group 3 can help other Islamic banks as equal or strong counterparties for interbank, risk sharing/syndication, and squaring hedging positions. This certainly cannot be obtained when UUS becomes BUS with limited capital. Considering that the UUS business model can make a significant positive contribution to the strategic steps for the growth and development of Islamic banking in Indonesia, the Indonesian government is pushing for the UUS business model to be maintained.
Islamic bank spin-offs can run well, UUS needs to prepare several things (Pernamasari, 2020). First, it has a core capital of at least IDR 1 trillion. If you want to compete better, then Islamic Commercial Banks (BUS) should have a core capital of at least IDR 3 trillion. This is by the proposal for a minimum capital of IDR 3 trillion in 2022 by the OJK. Second, have sufficient total assets. Indicators of total assets that are sufficient to be returned to each bank, one of which can use the indicator of the proportion of assets to the parent bank. Third, there is a trend of the soundness level of a bank with a very healthy predicate. Fourth, having infrastructure that supports BUS business acceleration, including technological readiness and human resources. Fifth, having a good cooperative relationship with its parent so that it can perform synergy or leveraging in various lines, except in terms of management structure and capital.
Spin-offs must be carried out when a conventional and/or sharia bank has a UUS whose asset value is at least 50 percent of the total asset value of the parent bank. This also applies to all UUS, 15 years after Law no. 21 of 2008 was ratified. The provisions in Article 68 indicate that a sharia business unit that still has a conventional parent is ready to separate itself from its parent so that it becomes an independent business entity. This readiness is measured through company performance, such as financial performance, management, human resources, network, and others.
The impact shows the development of Islamic banks (Nasuha, 2016).
The development of sharia banking in Indonesia led to the realization of the merger of three existing sharia banks, namely Bank Syariah Mandiri (BSM), BNI Syariah (BNIS), and BRI Syariah (BRIS). The definition of a merger is a process of merging two companies where one of them remains standing and uses the name of the company while the other company disappears and all of its wealth is included in the company that remains standing (Handyanto et al., 2021). Some explain that the meaning of a merger is the merging of two companies into one, in which the merging company takes over all the assets and liabilities of the company that received the merger.
A merger is a form of external expansion of a company by combining two or more companies, where only one company name remains standing while the other companies are dissolved on legal grounds without prior liquidation.
A merger is a merger of two or more companies in which only one company survives as a legal entity, while the others stop their activities or dissolve. The company that is dissolved transfers its assets and liabilities to the company that takes over so that the company that takes over experiences an increase in assets (Mareta et al., 2021). There are several types of mergers.
21 Among others: are horizontal, vertical, and conglomerate mergers. Each of them has its characteristics. A horizontal merger is a process of merging two or more companies where the company’s business type is still the same. As happened in the banking industry. Then a vertical merger. A vertical merger is a merger process in which in practice there is a fusion between several interconnected companies. Generally, smelting occurs in the production line (Rani, 2020). Mergers like this are common in the automotive industry. Finally, conglomerate mergers mean the merging of several companies to produce products that have nothing to do with one another. The purpose of a conglomerate merger is to increase the growth of the business entity. Work practices are generally carried out by exchanging shares between companies that are merged (Wiyono, 2021).
Bank mergers are regulated in Government Regulation Number 28 of 1999, Company Law Number 40 of 2007, and Sharia Banking Law Number 21 of 2008. Mergers or other corporate actions aim to increase shareholder value. The merger of BSM, BNIS, and BRIS must also be able to increase value for other stakeholders such as the sharia banking industry, the business world (MSMEs), the world of education, management of Hajj funds, and the development of the sharia economic ecosystem in a broad sense.
The Government of the Republic of Indonesia aspires to strengthen the role of the financial industry in national economic equality. This aspiration is realized in the form of a merger of BUMN-owned Islamic banks (Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia) which are expected to become the largest Islamic banks in Indonesia that are globally competitive and have the potential to become the top 10 Islamic banks globally based on market capitalization.
As a country with the largest Muslim population in the world, the growth of the sharia industry in Indonesia is still relatively stagnant. Based on December 2020 data, the market share for Islamic banking in Indonesia is currently only 6.3% and this figure has not moved much in recent years (Tyas and Rusydiana, 2020). Therefore, the presence of BSI is a momentum for the development of the Islamic economic and financial industry, especially Islamic banking in Indonesia. This is because BSI has strong capital so it is hoped that there will be no more limitations in its range and products.
The formation of BSI is a catalyst for the development of Islamic economics and finance in Indonesia which at the same time can elevate Indonesia’s Islamic economy on the global stage.
BSI is also a game changer for the halal industry in Indonesia, which has so far been touted as having great potential. The merger of the three Islamic banks resulted in a more solid financial performance to build optimism for the development of BSI. As of December 2020, BSI’s total assets reached nearly IDR 240 trillion with equity of IDR 21.74 trillion. With this capital, BSI is expected to be able to strengthen the institutional sharia financial industry while at the same time being able to elevate Indonesia’s sharia economy on the global stage. Before the merger, the national bank rating BSM was in 15th position, BRI Syariah was in 27th position and BNI Syariah was in 31st position. After the merger, BSI was ranked 7th as a national bank based on assets and is expected to become a locomotive for Islamic banking, both nationally and globally (Media Internal Kementrian BUMN, 2021). Seeing the potential that exists in Indonesia, can the merger
22 of Islamic banking provide “fresh air” for the Indonesian economy? Moreover, the current economic condition is currently experiencing a global recession.
Based on the description and data above, research on the progress of Islamic banking in Indonesia from spin-offs to developments into mergers is very relevant to do. This study provides a real contribution to the factual and comprehensive model of the merger of Islamic banks in Indonesia.
RESEARCH METHODS Types of research
The qualitative research method is research that is used to examine the condition of natural objects, where the researcher is the key instrument (Creswell, 2018). Literary study is data obtained from various written sources or reading materials in the form of books (textbooks, dictionaries, encyclopedias, and others), journals, magazines, or in the form of research reports (thesis, theses, and dissertations), both stored in the library or not. Literature study is an activity of studying, exploring, and citing theories or concepts from several kinds of literature, whether books, journals, magazines, Islamic banking reports, or other written works that are relevant to the topic, focus, or research variables.
Research Approach
The conceptual approach in this study is a research approach to the concept of mergers and the impact of mergers. This approach departs from the views developed in the science of the state- owned Islamic bank's merger. This approach is important because it understands the views that are developing to build arguments when selecting policies to be taken. This view will clarify ideas by providing an understanding of concepts that are relevant to the problem. Based on the description above, the term conceptual approach is an approach that emphasizes the presentation or discussion of concepts. In other words, the conceptual approach means an approach with the process of abstracting an object and event through identifying, sorting, and clarifying the characteristics then connected to produce an understanding, definition, difference, and others regarding the state- owned Islamic bank's merger.
Data source
This research is a type of Qualitative-Library research. The data sources are field and literature obtained by going into the field, various literature, books, journals, newspapers, personal documents, and so on. More specifically, the data sources in this study are divided into primary data sources and secondary data sources. Primary data sources, namely data obtained directly by researchers as the main source of obtaining data (Given, 2012). The primary source in this research is the state-owned Islamic bank's merger. Secondary data sources are additional data sources that, according to researchers, support the main data. In this study, secondary sources came from books, journals, news, and interviews with BSI, namely employees/staff who handle mergers of Islamic
23 banks to find out firsthand how significant the impact of the merger of State-owned Islamic banks is.
Data collection technique
The technique of collecting data in this research uses library research and interviews. The use of the literature study here is to examine the merger of state-owned Islamic banks. Interviews are used as a data collection technique in conducting research studies to obtain information related to the state-owned Islamic bank's merger, but they can also be used to find out things that respondents know in more depth. In this study, the researcher conducted interviews only as confirmation at BSI. The researcher asked several questions regarding the merger of state-owned Islamic banks, as well as conducted interviews with the work unit concerned at Bank Syariah Indonesia.
Respondents in this study were BSM, BRI Syariah, and BNI Syariah stakeholder representatives. The total number of respondents amounted to nine people. The interview instrument in this study was guided by semi-structured interviews. This guideline contains a list of questions that contain themes and a flow of discussion as a guide for control deeper about how the impact and model of the merger of State-owned Islamic banks in Indonesia. this interview instrument is very relevant to find out more about the state-owned Islamic bank's merger.
Data analysis technique
Data analysis is a way to analyze the results of the data that has been obtained in research so that it is easier to read and interpret. In data analysis, several stages are needed. Analysis of qualitative research data, namely: a. Data Collection or data collection, is data collection by data analysis, in which the data is obtained during data collection without a sorting process; b. Data reduction, is data processing that includes activities to endeavor the results of data collection as completely as possible, and sorting them into certain conceptual units, certain categories, or certain themes; c.
Data display or data presentation is data from research fields that are presented scientifically by researchers without covering deficiencies; d. Conclusion drawing or drawing conclusions, by looking back at the data display reduction so that the conclusions drawn are not offensive (Knowles and Cole, 2012).
RESULTS AND DISCUSSION
Islamic Banking in Indonesia: Recent Growth
Sharia banks in other countries are better known as Islamic banks (Saâdaoui and Khalfi, 2022).
Islamic banks are defined as banking institutions that carry out all banking activities including interest-free loans and financing (Kaaroud et al., 2020). One of the most distinguishing features of Islamic banks is their financial products which are based on the usury prohibition, thus the product design of Islamic banks is partnership and risk sharing. Apart from that, the nature of a capital contract is in the form of mudharabah, where one party provides capital and the other party provides entrepreneurship, thus the risk of asymmetric information can be minimized, due to the nature of the contract which divides rewards and risks equally (Al Rahahleh et al., 2019). Islamic
24 banks aim to provide banking services by Islamic principles and Sharia in the Islamic financial system as a whole, which aims to bring benefits to the community in terms of ownership and welfare so that it does not merely create maximum profits from the use of its capital (Widodo et al., 2022).
Islamic banks in Indonesia are growing rapidly (Adinugraha, 2021). As the largest Muslim country in the world, Indonesia has an important role in building an Islamic economy. With the birth of BSI as a result of the merger of three BUMN-owned Islamic banks, Indonesia is targeted to become the center of Islamic economics and finance in the world.
Islamic banks are increasingly showing progress after the enactment of Law Number 10 of 1998, which regulates the legal basis and types of businesses that can be run and applied to Islamic banking, also directs commercial banks to establish Islamic banks in the form of branches or change the whole to form Islamic banking. After the law was revised, it was also approved by the government, Law no. 21 of 2008 was made to compile detailed rules and prohibitions for Islamic banking and the propriety of the distribution of funds. As well as the issuance of laws made by the central bank, the aim is that the performance of Islamic banking is always guided by Islamic law as well as government regulations, the public is not made to lose customers, and supports the pace of the economy in Indonesia (Hudaefi, 2022). To develop sharia banking, Bank Indonesia issued a Roadmap for the Development of Indonesian Sharia Banking to serve as a guideline for sharia banking stakeholders to achieve the goal of developing sharia commercial banks in Indonesia so that they can continue to progress and develop (Putri and Rachmawati, 2022).
Data from the Central Statistics Agency (BPS) noted that Indonesia’s economic growth in the second quarter of 2022 reached 5.44% on an annual basis or year-on-year (YoY). The momentum for economic recovery occurred in the second quarter of 2021 which grew by 7.07%, and continued in the third quarter/of 2021 reached 3.51%, the fourth quarter/of 2021 was 5.02%
and the first quarter/of 2022 was at the level of 5.01%. . Regarding the performance of the economic recovery that continues, this is still supported by Windfall Profit. The main export commodities and people’s mobility are returning to how they were before the pandemic (Adinugraha, 2020).
In addition, the consistently expansive manufacturing sector was also followed by the Micro, Small, and Medium Enterprises (SMEs) segment which was getting excited again. As a result, the national banking industry’s total loan growth shot up to double digits to a level of 10.66% to IDR 6,313 trillion in June 2022.
Although credit growth occurred amid tightening liquidity, according to him, the Capital Adequacy Ratio (CAR) or banking capital adequacy ratio was above the threshold, indicating strong financial sector stability. Even though credit growth occurred amid tightening liquidity, according to him, the Capital Adequacy Ratio (CAR) or banking capital adequacy ratio was above the threshold, indicating strong financial sector stability.
25 Sharia Banking Spin-Off in Indonesia: Regulation and Its Influence
Islamic banking in Indonesia began to develop significantly with the amendment of Law no.
7 of 1992 with Law no. 10 of 1998 concerning Banking when conventional commercial banks are allowed to operate based on sharia principles by opening a Sharia Business Unit (UUS). The establishment of UUS is a mandatory requirement that must be carried out by conventional banks that wish to provide services based on sharia principles. This UUS arrangement was reaffirmed in Law no. 21 of 2008 concerning Sharia Banking (hereinafter written the Sharia Banking Law).
According to Article 1 number 10 of the Sharia Banking Act, what is meant by UUS is a work unit from the head office of a Conventional Commercial Bank that functions as the main office of an office or unit that carries out business activities based on Sharia Principles, or a work unit in a branch office of a bank that operates domiciled abroad who carry out conventional business activities that function as the main office of sharia sub-branch offices and/or sharia units (Arifin, 2021).
The existence of UUS as a work unit or division of a conventional bank is not permanent, but temporary. This is confirmed in Article 68 paragraph 1 of the Sharia Banking Law which states that in the case of a Conventional Commercial Bank owning UUS whose asset value has reached at least 50% (fifty percent) of the total asset value of its parent bank or fifteen years since the enactment of this Law, the said Conventional Commercial Bank is obliged to carry out the UUS Separation to become a Sharia Commercial Bank. Based on the provisions above, it is understood that conventional commercial banks are required to spin off their UUS to become Islamic Commercial Banks if their asset value has reached a minimum of 50 percent of the total asset value of their parent bank or has been in operation for 15 years since the enactment of the Islamic banking law (Supriyatni, 2021).
Related to the definition of the spin-off, according to Article 1 number 32 of the Sharia Banking Act, what is meant by a spin-off is the "separation of a business from one bank into two or more business entity banks by statutory provisions.” invitation”. Black’s Law Dictionary defines a spin-off as “a corporate divestiture in which a division of a corporation becomes on an independent company and stock of the new company is distributed to the corporation’s shareholders.” The definition of separation was also introduced in Law no. 40 of 2007 concerning Limited Liability Companies, where what is meant by separation is a legal action carried out by the Company to separate the business which results in all of the Company’s assets and liabilities being transferred by law to 2 (two) Companies or more or part of the Company’s assets and liabilities being transferred due to law to 1 (one) Company or more’ (Article 1 point 12). This Limited Liability Company Law is referred to because the legal entity form of an Islamic bank is a Limited Liability Company, so it has close relevance. Based on the definition above, it can be understood simply that what is meant by UUS spin-off for Conventional Commercial Banks is the process of separating UUS from its parent bank into a Sharia Commercial Bank with its legal entity that is independent and independent.
Regarding the UUS spin-off mechanism, it has been specifically regulated in Bank Indonesia Regulation (PBI) Number 11/01/PBI/2009 (see Chapter IX Articles 40-54). It should be noted that PBI No.11/10/PBI/2009 concerning Sharia Business Units was amended by PBI No.15/14/PBI/2013 concerning Amendments to Bank Indonesia Regulation No.11/10/PBI/2009 concerning Sharia Business Units, but the editor of several articles is still maintained as before (Nastiti and Kasri, 2019).
26 According to Article 41, there are two ways to separate UUS from BUK, first by establishing a new Islamic Commercial Bank (BUS); and second by transferring UUS rights and obligations to the existing BUS. ‘Separation of UUS by way of the establishment of BUS can only be done with the permission of Bank Indonesia (now the Financial Services Authority). The paid-up capital is at least five hundred billion rupiahs (Rp. 500,000,000.00). If the paid-up capital is insufficient, the addition can be made in cash and/or land and buildings used for the operations of the BUS resulting from the separation. The paid-up capital of the BUS resulting from the separation must be increased to a minimum of one trillion rupiahs (1,000,000,000,000.00) no later than ten years after the BUS business license is granted (See Article 45) The issuance of permits to establish BUS resulting from separation is carried out in two stages: a. principle approval, namely approval to carry out preparations for the establishment of BUS resulting from separation; and b. business license, namely a license granted after the BUS resulting from the separation is ready to carry out operational activities (Article 46). It is important to note if a principle permit has been granted to BUK, but within 6 months after the principle permit is granted BUK has not applied for a BUS business license as a result of separation, then the principle approval that has been granted becomes invalid (Article 48). Therefore, BUK must prepare all the requirements to the maximum extent possible.
As for the second method of separation, namely the Separation of UUS by Transfer of Rights and Obligations to BUS, it can also only be carried out with the approval of Bank Indonesia (now the Financial Services Authority). If approval for the transfer plan has been obtained, then the BUK that owns UUS is required to announce this matter in a national newspaper no later than ten days and transfer UUS rights and obligations to BUS no later than thirty days after the date the transfer approval is given. If within 30 days the transfer of UUS rights and obligations to the BUS receiving the separation has not been carried out, the approval given is reviewed. Then the recipient of the separation is also required to report his financial condition after receiving the transfer of UUS rights and obligations no later than ten days after the implementation date (see Articles 52 and 53). It is important to note that the separation of UUS from BUK by transferring UUS rights and obligations to an existing BUS can only be made to BUS that has an ownership relationship with BUK that owns UUS (see Article 41 paragraph [3]).
Based on Sharia Banking statistics, OJK, January 2016, there are 12 BUS and 22 UUS. In 2005, there were only three BUS, namely Bank Muamalat Indonesia, Bank Muamalat, BSM, and Bank Mega Syariah, but currently, the number of BUS has increased quite significantly with several UUS conducting spin-offs to become BUS, including Bank BRI Sharia, PT BNI Syariah, and BJB Syariah. In the future, it is hoped that the existing UUS will immediately spin-off to become BUS so that the number of Islamic banks will increase and develop in Indonesia.
Data and facts on the ground regarding the development of Indonesian Sharia Finance globally. In terms of quantitative developments and the availability of regulations regarding Islamic finance, Indonesia is not even included in the top 5 countries in the world. However, at the level of Islamic financial literacy, Indonesia is in 2nd position after Malaysia (R. Setyowati, 2018). This shows that the average Indonesian people are more or less familiar with Islamic Finance, represented by academics, practitioners, and students who focus on studying in institutions that provide a curriculum on Islamic Economics and Finance.
27
“BSI’s potential to continue to grow and become part of the leading Islamic bank group at the global level is very wide open. In addition to positive growth performance, climate support that the Indonesian government has a mission to create a halal industrial ecosystem and has a large and strong national Islamic bank, the fact that Indonesia is a country with the largest Muslim population in the world also opens up opportunities.” (Results of interviews with BSI directors, 2022).
In addition to these data, Indonesia’s position as the country with the largest Islamic banking assets in the world is in 9th position, after countries in the Middle East, and neighboring Malaysia which again excels in the top 3 positions. This should be a question and motivation for the Islamic banking industry in Indonesia, to continue to innovate and improve after being established for approximately 28 years (Muafi, 2020).
If Indonesia focuses on seeing the development of Islamic banking, as of March 2020, Islamic bank assets are in the position of 5.99% of all banking assets in Indonesia. This position was achieved after the conversion of 2 regional banks in Indonesia, namely Bank Aceh to Bank Aceh Syariah in 2015, and followed one year later by Bank NTB which converted to Bank NTB Syariah. It is hoped that this (conversion or spin-off) will continue to occur as a form of practice of Law no. 21 of 2008 concerning Sharia Banking, of which one of the articles (Article 69 paragraph 1) requires every UUS that already has more than 50% of the assets of its Conventional Parent to separate itself to become a Sharia Commercial Bank (BUS), which must be pursued by conversion or spin-off.
If UUS chooses to the spin off, the market share of Islamic banking will automatically increase, but it will not significantly reduce the market share of conventional banking, because the conventional parent company will still exist. Another case is if they do the conversion. This causes a total transfer of assets from conventional banking to Islamic banking assets, because banks that previously operated with a conventional system, totally become Islamic banks (Maghfuriyah, 2019). As a result, the market share of conventional banking has decreased, and at the same time, the market share of Islamic banking has increased.
This conversion and spin-off trend has the potential to be continued by approximately 20 UUS in Indonesia, most of which are regional banks in each province. Currently, there are 2 regional banks, namely Bank Nagari and Bank Riau, which are in the process of converting their banking activities from conventional to sharia.
It is expected that with the increasing number of Regional Banks and UUS conducting conversions and spin-offs, the share of the Islamic banking market in Indonesia can be increased to a level of 10 or 20%. At the same time, the Indonesian government also hopes that Islamic banks will continue to improve themselves by improving the quality of service in terms of banking technology, human resources, and sharia compliance so that Islamic banking is more trusted by the public to carry out economic activities. they and this increases the market share of Islamic banking organically (Masnita, 2019).
28 Based on the findings of the data above, the two options available, conversion and spin-off, are more directing UUS and Conventional Banks to convert, because the requirements are more realistic to achieve, and it is more profitable to achieve an aggregate sharia banking market share (Suzuki, 2019). As there are more and more options for Islamic Banks in the future, Indonesian people are becoming more open to entrusting their financial activities to Islamic Banks.
The merger of BUMN Syariah Banks in Indonesia: Strategy and Impact
In a country’s economy, the financial services sector has a vital role in facilitating economic turnover (Hamzah, 2019). Such as Islamic banking which is one of the choices for Indonesian people in saving and making loans for venture capital.
Contracts that have been adapted to sharia principles are an added value and an attraction for the Muslim community in Indonesia, especially sharia economic activists (Aminah, 2019). However, Islamic banking is still far behind in terms of capital or assets when compared to conventional banking.
The Indonesian government is currently very aggressive in developing the Islamic economy.
The government also seems to pay attention to the financial sector, namely Islamic banking, which must be increased in terms of assets. The merger of Islamic banking under the auspices of SOEs such as BSM, BRI Syariah, and BNI Syariah is an option taken by policymakers.
With this merger, the assets of the three Islamic banks are predicted to accelerate. Large assets facilitate the development of bank financing. This can trigger an increase in the market share of Islamic banks nationally. One of the efforts to achieve this step is by merging or merging Islamic banks owned by state-owned banks.
“The banking industry in Indonesia recorded a new history with the presence of PT Bank Syariah Indonesia Tbk (BSI), which was officially born on February 1, 2021, was officially by President Joko Widodo at the State Palace”. (Results of interviews with BRI Syariah directors, 2022).
Etymologically, a bank merger is a merger between two or more banks while maintaining one of them with or without liquidating it. Then according to Government Regulation Number 28 of 1999, Merger is a merger of two or more banks, by maintaining the existence of one bank and dissolving the other banks without liquidating them first.
The type of merger according to the economic view is usually applied in three types, namely the horizontal merger which combines two or more companies where the type of business is still the same, then the vertical merger which merges several companies that are interconnected, for example in successive production lines.
For example, a tire company merges with a motorcycle company, as well as a conglomerate merger, a merger process that combines several companies that produce products that are not
29 related to one another. For example, a beverage company and a motorcycle company are used to increase the growth of business entities.
Of course, deciding on a merger between a bank and another bank has a clear background, objectives, and reasons. Strengthening the capital structure is one of the strong reasons for banks in Indonesia to merge. For example, Bank Mandiri, which was inaugurated on October 2, 1998, was the result of a merger with 4 banks, namely Bank Bumi Daya (BBD), Bank Ekspor Impor Indonesia (EXIM), Bank Pembangunan Indonesia (Bapindo), Bank Dagang Negara (BDN).
The results can be seen, currently, Bank Mandiri is one of the state-owned banks that have sufficiently large capital so that it can facilitate government programs to help the capital of the Indonesian people. However, it should be noted that in the merger process becoming a synergy is not an easy thing. Many things must be considered so that the result of the merger can become a healthy bank. One way is to choose a merger partner that is complementary and complies with the law.
The planned merger of State-owned Islamic banks is said to be the right step in the context of strengthening the Islamic economy in Indonesia. The condition of the Covid-19 pandemic that is currently hitting Indonesia is considered to be a momentum for Islamic banking to consolidate and work together in real terms. Previously, the plan for the merger of State-owned Islamic banks was rolled out by the Ministry of BUMN of the Republic of Indonesia, with the joining of State- owned Islamic banks that could open wider funding options in the country. In uncertain economic conditions during a recession, banks can work optimally in helping the national economy with the concept of profit sharing applied by Islamic banking. This is considered to provide benefits for all parties, both banking and society. Until now the market share of Islamic banking itself is still in the range of six percent (Sudarsono, 2020).
The financing portion is around 6.38 percent, in third-party funds or community funds that have been collected in the range of 6.7 percent5. In terms of assets, the total assets of all Islamic banks are IDR 537 trillion, while conventional banking has total assets of IDR 8,402 trillion.
The purpose of the merger of Himbara Islamic banks (Association of State-Owned Banks) is so that Indonesia can have large Islamic banks and can compete on the global stage. Consolidation of sharia banking can be momentum to optimize the sharia economy and finance. In addition, according to Abra, it will be necessary to create a new name for the new container for the merged Islamic banks to represent transformation, strengthen sharia principles, and highlight aspects of modernity.
With the merger, this Islamic bank in Indonesia has the potential to become a top ten category of global Islamic banks in terms of market capitalization7. It is estimated that with this merger, Islamic banks will have total assets of Rp. 220 trillion to Rp. 225 trillion. This figure is obtained from the asset position of three Islamic banks, a subsidiary of Bank BUMN, and one UUS BTN as of June 2020. The largest asset belongs to PT BSM with total assets of IDR 114.4 trillion in June 2020, an increase of 13.26 percent compared to the year-on period. year. Then followed by
30 BNI Syariah with assets of IDR 50.78 trillion, growing 17.8 percent year-on-year period, and BRI Syariah growing 34.7 percent year-on-year period of IDR 49.6 trillion. The UUS BTN assets are Rp. 31.09 trillion or grow 6.5 percent year on year. In addition to total assets, the merger of the three state-owned sharia banks was able to distribute Rp 272 trillion in financing and Rp 330 trillion in funding.
These three banks have positioning that will complement each other. BSM has a focus on the corporate credit segment and BRI Syariah on channeling financing to the MSME segment. BNI Syariah focuses on consumer banking, targeting millennials, and international funding because its parent company, namely BNI, has several overseas branches. Thus, there is a complementary competence of State-owned Islamic banks. The merger of BUMN sharia banking provides hope for the growth of sharia banking. The success of the government’s non-organic strategy greatly influences the map of the Islamic banking industry.
Based on statistics published on the OJK page, shows that the three banks that were merged, namely BSM, BRI Syariah, and BNI Syariah, constituted half of the breadth of Islamic banks in Indonesia. The assets of the three Islamic banks account for around 40% of the total assets of all Islamic banks. The merger process of the three state-owned sharia banks ensures that core capital will increase and reach a figure above IDR 19.4 trillion so that it has the potential to enter the ranks of Commercial Banks with Business Activities that have a core capital of between IDR 5 trillion- 30 trillion (Ardiansyah, 2022).
The merger of the three state-owned banks provides hope for the growth of Islamic banking in Indonesia. Looking at the data and facts above, it can be projected that the growth and success of the business strategies of the three sharia state-owned banks will greatly influence the portrait of the sharia banking industry going forward. Islamic banks are targeting the market for selling global bonds or Sukuk after the three of them successfully merged in February 2021.
Bank BRI Syariah becomes a survivor alias shell, namely the surviving entity. The reason is that BRI Syariah has taken the floor on the stock exchange before the other two banks. As a public company, Islamic bank financing is expected to continue to grow at least to reach an average compound annual growth rate of 15-17 percent per year.
The merger of Islamic banks also has a positive impact on society. Because with the infrastructure owned by each bank, services to customers can be wider in scope. So far, people have to use their respective ATMs or Islamic banks. With the merger, they can use the facilities at the merged Islamic banks. For operational problems, customers of the three Islamic banks need not worry because the merger process does not disrupt customer service. For the employees of the three Syrian banks that were merged, each parent bank is certainly committed not to lay off workers for each bank even though there is a merger.
The findings above are also supported by the findings of several research Badawi et al., (2020); Bazyar et al., (2021); and Kurniawan et al., (2022) which stated that the merging of three state-owned Islamic banks that turned into BSI and impact in various aspects. This impact occurs
31 on customers, employees, and the community. a). impact on customers, customers can still transact as usual. Customers can still use card-based electronic money, such as e-Money, Tap cash, and Brizzi. The customer is only waiting for information from BSI to update the information; b).
impact on employees, employee status of BNI Syariah, BRI Syariah, and BSM remains an employee of BSI and there is no termination of employment. BSI opened an officer development program and talent development program to recruit Superior Human Resources; and c). impact on society, BSI educates the public by launching a Sharia Economic literacy program in collaboration with major Indonesian organizations. BSI also accelerates the completion of the halal value chain in the development of the halal industry, financing supporting MSMEs, and participating in financing large-scale projects using sharia schemes (Ulfa, 2021).
The impact of the merger on the development of the sharia economy is also believed to be positive because the new entity that was born from this corporate action has large capital to move to become a driver of national economic growth (Fatinah et al., 2021).The merged Islamic bank has good potential because it inherits good things from the three entities involved. This makes the merged Islamic banks complete power to increase the market share of Islamic finance (Alam, 2022). The merged bank inherits the good values of the three entities involved, namely the work system and professionalism of BSM, BNI Syariah’s innovation capability, and understanding of local and regional conditions from BRI Syariah. This integration makes the merged bank a strong foundation to operate.
The growth potential and positive impact arise because the merged Islamic banks have abundant assets and resources. With these advantages, the merged entity can make the market share of the Islamic finance industry in Indonesia bigger than it is today. Based on calculations of performance per semester I/2020, the total assets of the merged Islamic bank reached IDR 214.6 trillion and their core capital was more than IDR 20.4 trillion. With the value of these assets and core capital, the merged Islamic banks are among the top 10 largest banks in Indonesia in terms of assets, and the top 10 in the world in terms of market capitalization (Ledhem, 2022).
In this merger, BRIS became the bank that received the merger from two other state-owned sharia banks, aka survivor banks. The merged Islamic bank retains its status as a public company and is listed on the Indonesia Stock Exchange with the stock code BRIS. However, the shareholders of the sharia bank resulting from the merger changed, from the majority of PT Bank Rakyat Indonesia Tbk (BBR) to PT Bank Mandiri Tbk (BMRI). Bank Mandiri owns 51.2% of BRIS shares, while PT Bank Negara Indonesia (Persero) Tbk. 25%, BRI becomes 17.4%, DPLK BRI - Sharia Shares 2%, and the public 4.4%.
Based on conservative estimates, the bank resulting from the merger could reach IDR 390 trillion in assets and has the potential to raise third-party funds of up to IDR 355 trillion and IDR 272 trillion in financing. The growth offered by this entity is very promising to encourage the Indonesian sharia economy, investment, and economic digitalization.
This merger has become an effective injection for efforts to consolidate the Islamic financial sector (Yumna, 2019). Efficiency is created from mergers, and this makes new entities more agile and competitive in conducting business (Muhammad, 2022). In the long term, the value created
32 from this merger is much higher than it is today. This condition is beneficial for the community, investors, as well as entrepreneurs, and MSMEs who will certainly be increasingly helped to get access to cheap financing from the merged banks.
The ongoing merger does not hurt other sharia banking or financial industry players. There are two reasons on which this finding is based. First, the merger of Islamic banks is intended not to eliminate other industry players, but to increase the competitiveness and penetration of Islamic finance. Second, research shows that existing customers of Islamic banks are religious Muslims, not swing customers (Darmalaksana, 2022).
Islamic bank customers do not easily switch services to other banks just because of the lure of better rates. Islamic banks resulting from the merger certainly do not eliminate fellow players in the Islamic finance industry, but instead, enlarge the market niche because they are focused on acquiring new customers from the unbanked community and customers from conventional banks.
The merger of three state-owned Islamic banks creates a new entity with a big vision if the formation of a new identity during the merger goes well. The presence of this big-vision bank is good for increasing Islamic financial literacy and inclusion. Financial literacy in Indonesia has been carried out massively with the resources of the merged bank. This is a good step for sharia financial institutions to reach religious leaders, women, and small entrepreneurs in the regions to use sharia products (Riptiono, 2021).all the findings and Observations above are also supported by the results of interviews with the leadership of BNI Syariah Indonesia:
“This merger brings together the advantages of the three Islamic banks, thereby providing more complete services, wider coverage, and having better capital capacity.” (Results of interviews with BNI Syariah directors, 2022).
Empirical Evidence of The State-Owned Islamic Banks Merger Model in Indonesia
The process of merging State-owned Islamic banks has started. The main objective of this merger is to increase the competitiveness of Islamic banking in the national financial industry as disclosed by the National Sharia Economic and Finance Committee, the Financial Services Authority, and Bank Indonesia. The Financial Services Authority (OJK) officially issued a permit for the merger of the three Islamic bank businesses on January 27, 2021, through letter Number SR-3/PB.1/2021.
Furthermore, on February 1, President Joko Widodo inaugurated the presence of BSI.
“The composition of BSI shareholders is PT Bank Mandiri (Persero) Tbk 50.83%, PT Bank Negara Indonesia (Persero) Tbk 24.85%, PT Bank Rakyat Indonesia (Persero) Tbk 17.25%. The rest are shareholders, each of which is under 5%.”
(Results of interviews with BSM directors, 2022).
The reason for the merger of state-owned Islamic banks, even though 87% of the total population in Indonesia adheres to Islam, the market share of Islamic banking is stuck in the range of 5-6%
after 20 years of the first Islamic banks being established in this country. The development of Indonesia’s sharia economy in the world is currently also lagging and is ranked fifth in the world,
33 based on State of Global Islamic Economy 2020 data, following Malaysia, United Arab Emirates, Bahrain, and Saudi Arabia (Dinar Standard, 2021).
This fact indicates that there is something that is not quite right and efficient in the Islamic banking industry so far. Therefore, the process of merging state-owned Islamic banks must be welcomed with joy. The community will benefit the most from this process because the Islamic banking products offered in the future will be cheaper and more competitive.
Why can the product offered be cheaper? Because the new state-owned Islamic banks get cheaper sources of funds with the amount of capital they have post-merger. The small capital of Islamic banking has so far been considered to be one of the main reasons for the difficulty of this industry to develop.
But this problem has disappeared because after the merger the new state-owned sharia bank has a core capital of IDR 20.7 trillion. This amount appears based on the calculation of BSM’s core capital of IDR 10.2 trillion, BRI Syariah IDR 5.2 trillion, and BNI Syariah IDR 5.3 trillion as of August 2020. With such a core capital, State-owned Islamic banks are included in the BUKU III bank group. core capital of IDR 5 trillion-30 trillion. Currently, there are only two sharia banks in the BUKU III group, namely BSM and BNI Syariah. Meanwhile, residents of the BUKU IV group with a core capital of more than IDR 30 trillion are conventional banks. Not only in terms of core capital, but State-owned Islamic banks will also have large assets, reaching IDR 214.75 trillion or nearly half of the total assets of Islamic banking in Indonesia. With this amount of assets, State-owned Islamic banks are the banks with the 7th largest assets in Indonesia following BRI, Bank Mandiri, BCA, BNI, BTN, and Bank CIMB Niaga.
Three important strategies need to be carried out by State-owned Islamic banks to achieve their goals. The implementation of a new marketing strategy must be carried out and follow the target market that must be addressed, namely prospective customers (i) rational (non-religious with religious doctrine), (ii) Muslim-nonreligious, (iii) Non-Muslim, (iv) unbanked people, and (v) others (millennials, swing customers, etc.).
The first way of marketing is shifting sales materials. Islamic banks must “sell” other things besides religious values, namely social, environmental, ethical, and sustainability values (Nofianti, 2019). By highlighting the universal values that have so far been upheld by the Islamic economy, the merged bank can attract rational, non-religious Muslim, and non-Muslim target customers (Shodiq, 2021).
Second, literacy, education, and inclusion reach unbanked people. With massive education, financial literacy will increase so that in the long run it will also foster inclusion. As of 2019, Indonesia’s financial literacy is only 38.03%, up 8.3% from 2016. While financial inclusion at the same time is 76.19%, up 8.3% from 2016. An increase in financial literacy followed by financial inclusion nationally does not occur in the Islamic banking industry. Indonesia’s Islamic financial literacy is only 8.93% in 2019, up slightly from 2016’s position of 8.1%. Meanwhile, Islamic financial inclusion decreased from 11.1% in 2016 to 9.1% in 2019. The main target of future literacy should focus on targeting housewives and religious leaders. Currently, the economic development of Islamic boarding schools is being intensively carried out. This is a good step to
34 reach out to religious leaders in Islamic boarding schools, so they can share their knowledge with their students so they can use Islamic banking products.
Third, digitizing business models and digitizing services. By digitizing business models and services, the customer experience will improve so that they can attract new customers. For digitizing services, the new state-owned sharia banks will be able to sample digital products from several banks that provide account opening and deposit opening/closing services easily, quickly, and free of charge; or free money transfers (Kurniawan, 2022). Meanwhile, the digitization of business models can be done by banks resulting from the merger by cooperating with financial technology actors so that they can become partners for business development. Indonesia becoming the center of Islamic finance in Asia is not just wishful thinking and it can be the hope of the Indonesian people together if the pre-merger and post-merger processes of these Islamic BUMNs go well.
The merger model of state-owned Islamic banks in Indonesia does not leave any problems because business mergers are carried out by fellow Islamic banks. New crucial records emerge if the merger is carried out by an Islamic bank with a conventional bank. DSN-MUI considers that this business merger is a good initiative to strengthen the assets and strength of Islamic banks, which have so far been independent. The government believes that the merged entity will later become Indonesia’s new pride.
BUMN sharia banks resulting from the merger in the future must demonstrate a commitment to continuing to serve the needs of small-scale customers or MSME actors. He reminded us that the merged bank should not only focus on channeling financing to large companies. This merger was carried out by BUMN and currently, there are still many other sharia banking industry players who can become people’s choices.
Related to the Islamic banking ecosystem, research results show that competition in the financial market is increasingly limited by various regulatory authorities. Many countries limit and control the number of banks that can operate in their territory. The goal is to maintain the profitability margins of the banking industry (Naceur and Goaied, 2011; Akter and Roy, 2017;) Yao et al., 2018; Shair et al., 2019; De Silva et al., 2020). Another study concluded that the mergers carried out by Japanese banks did not harm competition in the banking industry (Haryanto, 2020;
Marlina, 2020).
The ideal concept for the merger of State-owned Islamic banks has a target to increase revenue, and market share in the Islamic banking industry and provide more optimal customer service and reach all over Indonesia.
“BSI is an initiative for the birth of an Islamic bank that is the pride of the people, which is expected to become a new energy for national economic development and contribute to the welfare of the wider community. The existence of Bank Syariah Indonesia is also a reflection of the face of Islamic banking in Indonesia which is modern, universal, and provides well for all mankind, especially the people of Indonesia”. (Results of interviews with BSI directors, 2022).
35 The merger was carried out as an effort to boost revenue by improving service quality, even though the increase in income was offset by higher employee salary costs. The rate of return on equity improves as the cost of capital decreases. In the merger model of State-owned Islamic banks in Indonesia, the goal is to sell more services so that they have to take over ownership of Islamic banks, the acquisition target is then the marketing network is fully integrated. Merger efforts so that state-owned Islamic banks encourage the development of Islamic financial markets. Because the sharia market has a large enough demand prospect in Indonesia.
CONCLUSION
To develop the Islamic banking industry in Indonesia, the Indonesian government has merged three Islamic banks. The merger was carried out for three state-owned banks namely BSM, BNI Syariah, and BRI Syariah to strive for the development of the Islamic finance industry in Indonesia.
Mergers are carried out to increase effectiveness and efficiency. This step was taken so that Indonesia could become the center of Islamic economics and finance in the world. After the merger, State-owned Islamic banks in Indonesia immediately occupy the seventh or eighth position in the top ten banks in Indonesia and enter the top ten Islamic banking in the world. The merger process for the three banks has added assets and core capital for the merged bank. Its assets have exceeded the figure of more than IDR 225 trillion. The amount of capital and assets that increase in large numbers can encourage activities for Islamic banking. The merger of these three Islamic banks has become good momentum in encouraging the development of banking in Indonesia. The merger of state-owned sharia banks in Indonesia is considered to have created larger and more competitive Islamic banks. Unlike the previous State-owned Islamic banks, the majority of whose shares were owned by the parent company, a BUMN bank had the status of a go-public company, even though the majority of its shares were still owned by the government. Indonesia needs bigger and healthier banks at the regional level. As is well known, a bank’s business model is highly dependent on the cost of funds competition with other banks. The merger of state-owned Islamic banks in Indonesia is one of the ways to make Islamic banks bigger and have good competitiveness. The merger of State-owned Islamic banks amid the current situation is the right step to create a bigger Islamic bank in Indonesia. State-owned sharia banks in Indonesia resulting from the merger (Bank Syariah Indonesia) have been able to grow the MSME segment in an integrated ecosystem and value chain and can serve the retail segment with sharia-specific services. BSI is also able to develop the wholesale segment with innovative products including global business development, and fulfill transaction services through digital platforms that support business activities and provide sharia-specific transactions such as zakat, infaq, alms, and endowments, Gold Savings and Pawning and other Islamic Services that differentiates it from conventional banks. The presence of BSI is very important in Indonesia’s journey to realize its dream of becoming the center of gravity of the world’s sharia economy. BSI is a universal, open, inclusive sharia bank that reaches out to all segments of society. As a barometer of sharia banking in Indonesia and the world, BSI must always be observant and agile in seizing opportunities, must be able to innovate new trends in sharia banking, and not just follow existing trends.
36 BIBLIOGRAPHY
Adinugraha, H. H. (2020). PERBANKAN SYARIAH: Fenomena Terkini dan Praktiknya di Indonesia. Penerbit NEM.
Adinugraha, H. H. (2021). HALAL LIFESTYLE: Theory and Practice in Indonesia. Zahir Publishing.
Akter, R., and Roy, J. K. (2017). The Impacts of Non-Performing Loan on Profitability: An Empirical Study on Banking Sector of Dhaka Stock Exchange. International Journal of Economics and Finance, 9(3). https://doi.org/10.5539/ijef.v9n3p126
Al Arif, M. N. R., Mufraini, M. A., and Prabowo, M. A. (2020). Market Structure, Spin-Off, and Efficiency: Evidence from Indonesian Islamic Banking Industry. Emerging Markets Finance and Trade, 56(2). https://doi.org/10.1080/1540496X.2018.1553162
Al Rahahleh, N., Ishaq Bhatti, M., and Najuna Misman, F. (2019). Developments in Risk Management in Islamic Finance: A Review. Journal of Risk and Financial Management, 12(1). https://doi.org/10.3390/jrfm12010037
Alam, A. (2022). The impact of mobile banking use on the Islamic financial institutional interest:
A study in Indonesia. Banks and Bank Systems, 17(3), 1–11.
https://doi.org/10.21511/bbs.17(3).2022.01
Aminah. (2019). Financial performance and market share in Indonesia Islamic Banking:
Stakeholder theory perspective. International Journal of Scientific and Technology Research, 8(1), 14–18.
Ardiansyah, M. (2022). Accounting Conservatism In The Perspective Of Positive Accounting Theory: A Study Of Islamic Banking In Indonesia. Asian Economic and Financial Review, 12(6), 380–396. https://doi.org/10.55493/5002.v12i6.4500
Arifin, M. (2021). The Influence Of Islamic Law And Economic Principles On Banking Industry In Indonesia. Journal of Legal, Ethical and Regulatory Issues, 24(7), 1–11.
Asif Khan, M., AfaqHaider, M., Haider Hashmi, S., and Atif Khan, M. (2017). Islamic Finance Service Industry and Contemporary Challenges: A Literature Outlook (1987-2016).
Marketing and Branding Research, 4(4). https://doi.org/10.33844/mbr.2017.60249
Badawi, Hartati, W., and Muslichah, I. (2020). The moderating role of locus of control in complaint handling: A model of complaint handling using emotion and satisfaction in rural banks (BPR) after merging in Indonesia. International Journal of Innovation, Creativity, and Change, 12(4).
Basrowi, B., Suryanto, T., Anggraeni, E., and Nasor, M. (2020). The Effect Of Islamic Financial Literation And Financial Technology On Islamic Financial Inclusion. AL-FALAH : Journal of Islamic Economics, 5(2). https://doi.org/10.29240/alfalah.v5i2.1669
Bazyar, M., Yazdi-Feyzabadi, V., Rashidian, A., and Behzadi, A. (2021). The experiences of merging health insurance funds in South Korea, Turkey, Thailand, and Indonesia: a cross- country comparative study. In International Journal for Equity in Health (Vol. 20, Issue 1).
https://doi.org/10.1186/s12939-021-01382-w
37 Binti Ismail, S. A., and Hassan, R. (2021). Issues and Challenges of Islamic Trade Finance Faced by Islamic Banks in Malaysia. Lecture Notes in Networks and Systems, 194 LNNS.
https://doi.org/10.1007/978-3-030-69221-6_125
Can, U., and Bocuoglu, M. E. (2022). Evolution of Islamic liquidity management in Turkey. In International Journal of Islamic and Middle Eastern Finance and Management (Vol. 15, Issue 4). https://doi.org/10.1108/IMEFM-10-2020-0506
Cresswell, J. W., and Creswell, D. J. (2018). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. In Journal of Chemical Information and Modeling (Vol. 53, Issue 9).
Darmalaksana, W. (2022). The need for social theology to strengthen the social functions of Islamic banking in Indonesia. HTS Teologiese Studies / Theological Studies, 78(1).
https://doi.org/10.4102/hts.v78i1.7342
De Silva, D. S. P. N., Chinna, K., and Azam, S. M. F. (2020). The Influence of Net Interest Margin (NIM) on Profitability of Sri Lankan Banking Industry. Global Journal of Management and Business Research. https://doi.org/10.34257/gjmbrbvol19is7pg25
Di Bella, V., and Al-Fayoumi, N. (2016). Perception of stakeholders on corporate social responsibility of Islamic Banks in Jordan. EuroMed Journal of Business, 11(1).
https://doi.org/10.1108/EMJB-01-2015-0003
Dinar Standard. (2021). State of the Global Islamic Economy Report 2020/2021. State of the Global Islamic Economy Report 2020/21.
Djuminah, Revida, R., and Septiarini, D. F. (2019). Competition, diversification, and stability: A study at an islamic bank in Indonesia. Opcion, 35(Special Issue 22).
Fahmi, M., and Septiarini, D. F. (2020). Does the spin-off policy change the shariah bank financial ratio? Opcion, 36(Special Edition 27).
Fatinah, A., Iqbal Fasa, M., Ekonomi dan Bisnis Islam, F., and Raden Intan Lampung, U. (2021).
Analisis Kinerja Keuangan, Dampak Merger 3 Bank Syariah Bumn Dan Strategi Bank Syariah Indonesia (Bsi) Dalam Pengembangan Ekonomi Nasional. Jurnal Manajemen Bisnis (JMB), 34(1).
Given, L. (2012). The SAGE Encyclopedia of Qualitative Research Methods. In The SAGE Encyclopedia of Qualitative Research Methods. https://doi.org/10.4135/9781412963909 Hamzah, Z. (2019). Quality improvement strategy of islamic banking services in Indonesia
through the integration of Servqual and Importance Performance Analysis (IPA). Espacios, 40(30).
Handyanto, S., Astuti, M. S., and Ajiputra, K. S. (2021). Indonesia Sharia Bank Merger Process Reviewed from Business Competition Laws. Lex Scientia Law Review, 5(1).
https://doi.org/10.15294/lesrev.v5i1.46288
Haryanto, S. (2020). Efficiency, Risk and Profitability of Islamic Banks: Under Pressure in the Competition of the Banking Industry in Indonesia. KnE Social Sciences.
https://doi.org/10.18502/kss.v4i9.7345
