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This paper aims to investigate whether Syariah banks are more financially stable than non-Syariah banks and check the differential impact of explanatory variables in financial health and efficiency in the context of Indonesia.

By using unbalanced panel data from Bankfocus over the period 2011–2018, regression analysis is performed with two response variables representing financial health, ZSCORE for return on average assets, liquid asset to deposit and short-term funding ratio. A number of control variables are used as tools to confirm the hypotheses. To check the robustness of the findings, a model with different specifications has been used.

The results indicate that while Syariah banks present higher insolvency risk (less health) for long-term activity, the opposite is true for short-term activity. Other findings show that Syariah and non-Syariah banks contribute differently to the national system of financial stability owing to varying influential factors on the bank’s health.

This paper presents a comparative analysis between the financial stability of Syariah banks and that of non-Syariah banks in Indonesia by building an empirical framework that allows the author to examine the differential effects of each underlying feature on financial stability in Syariah and non-Syariah banks.

Purpose – The purpose of the research is to analyze the efficiency of Islamic banks in Indonesia. The data used in this research are panel data observed from 2012 until 2016. The sampling of this research is conducted on five Sharia banks in Indonesia, that is, Bank Muamalat, Bank SyariahMandiri, BukopinSyariah, BRI Syariah, and Bank Mega Syariah.

Design/Methodology/Approach – The study uses a quantitative method to analyze the efficiency of Sharia banking with formulation of comparison of operating expenses to operating revenues (BOPO).

Finding – The result of this research concludes that Sharia banking in Indonesia has not been efficient during the last five years, that is, 2012–2016. This can be seen from the range of banking efficiency ratio. The average level of Islamic banking efficiency ranges between 89.73% and 94.16%. Bank Muamalat whose range is 94.16% shows the highest average efficiency ratio compared to other Sharia banks. Meanwhile, Bank Mega Syariah maintains the lowest average efficiency ratio that is 89.37%. The five Sharia banks have a high efficiency ratio of over 80%. This shows that Sharia banking in Indonesia is inefficient

Originality/Value – The bank should be able to balance between cost (cost) and revenue. Sharia banks must also be able to create good product innovation in order to increase the collection of funds from the community, such as for competitive outcomes, prizes, or other programs that raise public interest to use the services of Sharia banking.

Research Limitations/Implications – This inefficiency is due to the high bank operating costs compared to the bank’s operating income.

The purpose of this paper is to explore disclosure on corporate governance mechanisms in annual reports of Islamic commercial banks in Indonesia.

Employing a sample comprising seven Islamic commercial banks in Indonesia, the present study constructs the so‐called Corporate Governance Disclosure Index (CGDI) to score the banks' disclosure level. Corporate governance mechanisms addressed in this study include Shariah Supervisory Board, the Board of Commissioners, the Board of Directors, board committees, internal control and external audit, and risk management.

It is revealed that Bank Muamalat and Bank Syariah Mandiri, the county's two largest and oldest Islamic commercial banks, score higher than their peers. Disclosure of the sample banks on some dimensions, such as board members and risk management, is found to be strong. On the other hand, disclosure on internal control and board committees tends to be weak.

This study shows that the average disclosure level among the sample banks is relatively low. Hence, this result has important implications for the enhancement of corporate governance disclosure of Islamic banks, thereby wider acceptance and enhanced reputation could be gained.

This paper is believed to be among the first to explore the practice of disclosure on corporate governance mechanisms among Islamic commercial banks. Additionally, it focuses on Indonesia, the largest Muslim country that has a different institutional setting from that in other Muslim countries.

This paper aims to outline the argument for social outcomes as an objective for Islamic banks and investigate whether social failure exists in Islamic banking in Indonesia by assessing it against this performance dimension.

Content analysis of the annual reports of a sample of 12 Islamic commercial banks, seven Islamic banking units, and seven Islamic rural banks operating in Indonesia. The social outcomes to be measured employ the social objectives and disclosure measures from the prevailing literature, combined with the Kinder, Lydenberg, Domini Research and Analytics index of corporate social performance, the United Nations’ 17 Sustainable Development Goals and five Environment Social Governance Scorecards developed by Oikocredit, a global cooperative and social investor group.

Social failure evident in all Islamic rural banks and half of all Islamic commercial banks, but in only one of the seven Islamic bank units where most banks appear to pursue social outcomes at the accommodative level (accepting and doing all that is required). A social outcome-weighted asset formulation reveals Islamic banking has improved in meeting its social objectives over time, but sometimes at the cost of other objectives relating to the environment and customers.

Single-country context for analysis and limited period of analysis given rapid growth of industry and less stringent reporting requirements in the past.

Islamic banking in Indonesia needs to continue to improve its social outcomes, particularly in relation to the environment and customer benefits.

Emphasis on banking supervisory bodies to regulate and provide incentives for the industry to address the social issues upon which consumer support, industry efforts and regulation draws.

Few existing studies investigate the social dimension of Islamic banking, not least in Indonesia. Novel quantitative and qualitative application of content analysis.

In Indonesia, subjective issues towards the fundamental of Islamic banks (IBs) have been arising. For example, they are claimed to be not in line with the Shari‘ah (Islamic law). Furthermore, the existing scholarly works have not much gained knowledge from the local IBs explaining their efforts in promoting maqasid al-Shariah (objectives of Islamic law). Hence, because religiosity drives the fundamental establishment of IBs, this paper aims to explore the knowledge of how IBs in Indonesia promote maqasid al-Shariah via their published reports.

This paper performs text mining from 24 official reports of 5 IBs in Indonesia published from 2015 to 2017. The sample contains 7,162 digital pages and approximately 3,021,618 words. Traditional text mining via human intelligence is first performed to analyse for the numerical data required in the maqasid al-Shariah index (MSI) analysis. Furthermore, a computer-driven text mining using the ‘Text Search’ feature of NVivo 12 Plus is conducted to perform qualitative analysis. These approaches are made to gain relevant knowledge of how the sampled IBs promote maqasid al-Shariah from their published reports.

The analysis using the MSI explains a quantified maqasid al-Shariah on the sample’s performance, which indictes the lowest and the highest performing banks. Furthermore, a qualitative analysis supports the evidence from the quantitative analysis. It explains the authors’ coding process that results in 2 parent nodes and 20 child nodes, which contain 435 references coded from the sampled unstructured and bilingual texts. These nodes explain the information that associates with maqasid al-Shariah from the IBs’ reports. These findings explain how maqasid al-Shariah is measured mathematically and represent relevant knowledge of how maqasid al-Shariah is informed practically via digital texts.

A positivist generalisation is neither intended nor established in this study.

This paper gains relevant knowledge of how the sampled IBs in Indonesia control and maintain the implementation of maqasid al-Shariah from large textual data. Such knowledge is practically important for IBs stakeholders in Indonesia; moreover to help navigate the Shari‘ah identity of Bank Syariah Indonesia (BSI), the new IB established from the merger of 3 state-owned IBs, which are among the sample of this study.

This paper provides evidence that might best challenge the subjective issue of IBs claiming that they are not in line with the Shari‘ah, particularly in Indonesia.

This paper is among the pioneers that discover knowledge of how IBs promote maqasid al-Shariah in Indonesia’s banking sector via a text mining approach.

This study aims to analyze IFIs’ stakeholders’ perception on Shariah harmonization for financial reporting standards inIndonesia as a part of the development effort of linking the emerging global Islamic banking to Indonesian financial and industrial markets.

A sample of 160 respondents, who were stakeholders of Islamic banks, was taken from Jakarta, the capital city of Indonesia and its surrounding major districts to examine the stakeholders’ perception on Shariah harmonization effort toward the implementation of a uniformed financial reporting standard for Islamic financial institutions. Data for this study were collected using a structured questionnaire.

Through this study, the authors found several measures to be taken to ensure Shariah harmonization efforts in Indonesia such as deep understanding on the fatawā brought into practices and strict monitoring on the Islamic banks in applying the financial reporting standards that imply practicing the fatawā, both de jure and de facto. However, the respondents differ in their opinion on the possibility of Shariah harmonization, both de jure and de facto. The role of various actors involved in the financial reporting standardization may impede Shariah harmonization to take place.

The study is only looking at one case study, which is Indonesia. Therefore, future studies should consider more countries and significant number of respondents. Different research instruments to measure the perception can also be an interesting research exploration. In addition, adopting deep Islamic political economy of accounting theory may support better analysis on the issue of financial reporting standardization for Islamic financial institutions.

This paper has practical significance for financial reporting standard setters for Islamic banks and policy-makers to understand the key behavioral and demographical dimensions of their stakeholders and using these dimensions to effectively position important aspects in financial reporting standards setting.

Quiet life hypothesis (QLH) states that banks with a higher market power will generate high profitability quietly, even though it could cause inefficiency. In the long term, it could turn a high profitability into a lower future profitability. This paper identifies QLH-reborn through the holdinglisation strategy of the Indonesian Government to include all state-owned banks into one holding, hence increasing the market power of Indonesian state-owned banks within ASEAN. Optimum profitability and optimum efficiency are the objectives of the “holdinglisation” idea. Therefore, the purpose of this paper is to analyse the relevance of holdinglisation within the Indonesian banking industry.

This paper focusses on analysing the efficiency and soundness of four state-owned conventional banks and four state-owned Islamic banks in Indonesia during 2011–2015. Subsequently, this paper analyses the impact of bank effectiveness index and soundness rank on return on average asset (ROAA) and ROAE through the data panel of general least square regression using STATA.

This paper shows that all state-owned commercial banks in Indonesia during 2011–2015 are efficient and sound. Furthermore, this paper finds that market power (market share for deposit and market share for loans) has an insignificant impact on bank efficiency (BE) index, bank soundness rating, ROAA and EM. Meanwhile, BE index and BS rating have a significant impact on ROAA. Therefore, this paper concludes that holdinglisation regulation as QLH-reborn is irrelevant for Indonesian state-owned banks at this moment.

This paper has a crucial limitation. Holdinglisation as QLH-reborn is irrelevant under the condition that all state-owned commercial banks in Indonesia are efficient and sound. Moreover, this paper contributes another actual empirical study of QLH.

This paper represents a scientific argumentation towards a holdinglisation strategy of state-owned commercial banks in Indonesia. Therefore, this paper could be a scientific reference for the Indonesian Government to improve Indonesian state-owned commercial banks competitiveness in ASEAN.

This paper is urgently needed for the Indonesian banking industry because the Indonesian Government should consider the drawbacks of holdinglisation as QLH reborn to the Indonesian banking industry, such as inefficiency and the risks of financial failure. Moreover, if the bank experiences financial failure, it could have a detrimental and lasting effect on the country’s macroeconomic condition.

This study aims to investigate the drivers of loyalty in Indonesian Islamic banks, especially group of depositor vs financing customer and single vs dual customer.

The objectives of this study were the seven major commercial Indonesian Islamic banks using the purposive sampling technique. In total, 105 questionnaires were processed, consisting of questions regarding depositors, financing, single and dual customer. Structural equation modeling using partial least squares were the analysis methods used to test the hypothesis, while in-depth interviews were conducted with Islamic bank managers to validate the findings.

Image has a significant relationship with customer satisfaction, as well as trust. Similarly, customer satisfaction has a significant relationship with trust. Trust has a significant relationship with loyalty. For a financing customer, the image is very influential on customer trust. For a depositor customer, customer satisfaction is very influential on customer trust. For single customer, customer satisfaction has a stronger influence on the image, compared to dual customer.

Islamic banks need to maintain good image and service quality to create strong, reliable and long-term relationships with customers, more specifically, in terms of improvement and product innovation. A bank focuses on the micro or macro segment, as well as financing. Financing products should be referred to customers’ needs. Bank reputation can be done by strengthening branding and corporate culture in marketing strategy. Shariah compliance has the highest loading factor to trust customers. Indonesian Islamic banks need to maintain customer trust by sticking to Islamic principles and continuing to ensure that its products and services are in accordance with Islamic principles. In Indonesian Islamic banks, it is very important to keep the legal aspects in all of products and services. Deposit products and services of Islamic banks should be in line with the rules of the financial services authority and Bank of Indonesia culture. Bank efforts to strengthen reputation can be done by strengthening branding and corporate culture in marketing strategy, while increasing the attractiveness of the products by way of research and development (R&D) must endeavor to make products and services attractive in terms of both product characteristics and price. Furthermore, it is necessary to support a good marketing strategy to market their products.

Research can be used more widely in determining public policy, by strengthening the marketing strategy and public education. Islamic banks can work together with local religious departments to maximize marketing strategies to educate and convince people to be active economically under Islamic sharia guidance. Islamic banks need to maintain customer trust by sticking to the principles of sharia and continuing to ensure that products and services conform to sharia principles. Islamic bank management can strengthen customer trust by having a good risk management system, so that customers feel secure with Islamic bank transactions. In addition, sharia banks as companies must demonstrate social responsibility by distributing ZIS managed from customers and implementing CSR as a form of awareness of the surrounding community.

The study revealed the factors that lead to loyalty on the financing, depositor and the single and dual customers. The study found that improvement and innovation, strategic and sustainability are new indicators used to build images of Islamic banks.

Cash-waqf is one of the transformative models of waqf assets submission to optimize the receipt of waqf of money in Indonesia. Currently, cash-waqf can be paid through the platforms that are integrated with digital sharia banking systems (DSBS) such as Jadiberkah.Id (Bank Syariah Mandiri), Digital Wakaf Hasanah (Bank Negara Indonesia Syariah) and other waqf online services provided by Bank Syariah Bukopin, Bank Commerce International Merchant Bankers Niaga and Bank Rakyat Indonesia Syariah. This study aims to investigate the role of DSBS in stimulating Muslim youth’s decision to endow cash-waqf in Indonesia.

This research involved 225 Muslim youth from several universities across the Special Province of Yogyakarta and Central Java as the research respondents. The analysis was conducted using partial least square structural equation modeling with WarpPLS 7.0.

The result of the structural model indicates that the research model is structurally good since it meets all model criteria. Perceived ease of use (PEU) is found as the most significant predictor of perceived usefulness (PU). Both generate a significant effect on Muslim youths’ attitudes toward DSBS. Overall, subjective norm (SN), perceived behavioral control (PBC), PU and attitudes are important determinants that lead individual decisions to use the online cash-waqf payment through DSBS. Finally, the research findings conclude that DSBS plays a significant role in encouraging the interest of young Muslim generations to participate in cash-waqf transactions.

This study seeks to contribute to the existing literature by enriching the discussion on DSBS’s service, especially in the context of optimizing the collection of Islamic Philanthropy through cash-waqf transaction. Also, this study integrates theory of planned behavior (TPB) and the technology acceptance model (TAM) into a single research model to explore the determinants of cash-waqf participation in digital era.

The most crucial challenge facing Islamic Financial Institutions (IFIs) is the full compliance of their activities with shari'ah principles. The complexity of IFIs requires Otoritas Jasa Keuangan (OJK, Indonesian Financial Services Authority) to adopt a good shari'ah governance framework to address shari'ah risks of Islamic banking and financial institutions (IBFIs). However, the current shari'ah governance structure in Indonesia is far from ideal compared to the international best practice. This chapter proposes a new shari'ah governance framework by involving shari'ah supervisory board authority (Otoritas Dewan Pengawas Syariah) under the commissioners of OJK to oversight, regulate, and supervise the shari'ah matters for IBFIs in Indonesia. The chapter discusses the challenges in adopting this new framework. The chapter concludes that the current shortcomings of the proper shari'ah governance framework for shari'ah supervision and regulation requires a new shari'ah board authority under the commissioners of OJK who has full authority over shari'ah matters.