SPIN-OFF EFFICIENCY ANALYSIS OF INDONESIAN ISLAMIC BANKS

• Main Author: Sarifudin, Mohammad
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/72436
• Institution: Institut Teknologi Bandung

The development of Islamic banking in Indonesia for the last ten years has grown quite rapidly. This proves that Islamic banks can serve what is needed at current time. Through Law No.21 of 2008 concerning Islamic Banking, the government expect to drive the development and growth of Islamic banks in Indonesia more quickly and be able to act to encourage the national economy more broadly with conducted spin-off. A research of bank efficiency is substantial because financial sector development is a crucial substance for positive economic growth. Since the regulation was issued, there are only 4 Islamic business unit that have conducted spin-off which are BRI Sharia, BNI Sharia, Bukopin Sharia and BJB Sharia. The number of study regarding spin-off efficiency is still quite small. Conventional commercial bank which has an Islamic business unit can learn about efficiency of pre and post-spin-off performances of 4 Islamic Commercial Banks that have performed spin-off. This will lead to prepare adequate insight before actually conducting spin-off. The purpose of this study is to compare the efficiency of Indonesian Islamic banks before and after conducting spin-off and find out whether there are significant differences toward the efficiency of Islamic banks before and after spin-off. The study emphasizes on 4 Islamic banks that have conducted spin-off for period four years before and after spin-off. The study uses input-oriented VRS DEA model with intermediation approach to measure efficiency. Mann-Whitney test is used for hypothesis testing to examine the significant level of the efficiencies before and after conducting spin-off. The average efficiency of BRI Sharia, BNI Sharia, and BJB Sharia has improved after conducting spin-off. In the contrary, average efficiency of Bukopin Sharia has decreased after conducting spin-off. Looking at the trend-line, those four Islamic Banks possess better movement post spin-off than pre spin-off. There is no significant difference of BRI Sharia and BNI Sharia for both before and after conducting spin-off based on Mann-Whitney test. A significant difference occurs in Bukopin Sharia and BJB Sharia. Average median efficiency of Bukopin Sharia for pre-spin-off is significantly better compared to its’ post spin-off result. In the contrary, average median of BJB Sharia for post spin-off is significantly better compared to its’ pre spin-off.