Spin-off policy and efficiency in the Indonesian Islamic banking industry
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DOIhttp://dx.doi.org/10.21511/bbs.13(1).2018.01
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Article InfoVolume 13 2018, Issue #1, pp. 1-10
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Indonesian Islamic Banking Act requires conventional banks to spin-off their Islamic business units if they had fulfilled the spin-off criteria. Some of the Islamic business units had done the spin-off process although they are not fulfilling the spin-off criteria. The data showed that there is an efficiency decline after the spun-off. This study is going to examine the spin-off’s impact on the efficiency in spin-off banks. The method used in this paper is a difference-in-differences analysis. The sample used is four spin’s banks as treatment objects and two Islamic full-pledge banks as control objects. This research shows that there is an impact of spin-off policy on the efficiency in spin-off banks. There is an efficiency decrease in spin-off banks after the activities. It implies that the spin-off policy is not the only strategy that can be implemented. The policy-makers can choose other strategies to enhance the development of Islamic banking industry.
- Keywords
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JEL Classification (Paper profile tab)C39, E58, G21, L59
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References34
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Tables3
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Figures1
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- Figure 1. The theoretical framework of Islamic bank spin-offs
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- Table 1. The operational efficiency of spin-off banks
- Table 2. Difference-in-differences framework
- Table 3. Estimation results of spin-off and performance
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