COMPARATIVE ANALYSIS OF THE EFFICIENCY OF ISLAMIC BANKING IN INDONESIA BEFORE AND DURING COVID-19 PANDEMIC

• Main Author: Khoirunnisa, Safira
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/61667
• Institution: Institut Teknologi Bandung

COVID-19 starts become global emergence in 2019, and keeps spreading from one country to another. In February 2020, COVID-19 begun to enter Indonesia and has becoming the urge for the implementation of the social restriction and lockdown policy that leads to the weaken in the economy. In contrast, Islamic banking industry are being escalated marginally over the past century. Islamic banks are banks that conducts their business activities according to Sharia principles. The Banking Industry including the Islamic Banking, as a business unit, have to maintain their business performances, which could be conducted by measuring the efficiency of the bank. Efficiency becomes the measurement of how good is the business entity manages inputs into outputs or the number of outputs resulting from a single input used. Hence, this study purposes to analyse whether the Islamic Banking industry is being interrupted by the occurrence of COVID-19 pandemic, by assessing the efficiency of the Islamic Banking. This study uses Data Envelopment Analysis method with Variable Return to Scale model in output orientation. The variables used are based on the Intermediation approach which are Third Party Funds and Total Assets for the input, and Financing and Operating Income for the output. The samples are all of the Islamic Banks in Indonesia in 2019-2021 except PT Bank Net Indonesia Syariah (total of 13). After the efficiency are calculated, to see whether there is a difference between the Islamic Banks efficiency before and during COVID-19 pandemic, the Kolmogorov-Smirnov and Mann-Whitney U Test or Independent T-test are used. The result of this study is that the Islamic banks in Indonesia has not been efficient both before and during COVID-19 Pandemi. However, overall the Islamic banking are still increasing, with the score of 68,12% for before and 69,64% for during pandemic. Moreover, the correlation analysis using Mann-Whitney U test result indicates that the efficiency score before and during COVID-19 pandemic has no significant difference. Therefore, this could indicates that the occurrence of COVID-19 pandemic did not affect the Islamic Banking efficiency in Indonesia