Market Structure, Spin-Off, and Efficiency: Evidence from Indonesian Islamic Banking Industry

M Nur Rianto Al Arif, M. Arief Mufraini and M. Agung Prabowo

Emerging Markets Finance and Trade, 2020, vol. 56, issue 2, 329-337

Abstract: After the enactment of Law 21 in 2008 that stated about the spin-off of Islamic banking units, some Islamic business units had done the spin-off. This led to an increase in the number of full-fledged Islamic banks. This study examines the relationship among spin-offs, market structure, and efficiency in the Islamic banking industry. We find a difference in efficiency between spin-off banks and non-spin-off banks. The increasing number of full-fledged Islamic banks does not mean that performance (measured by efficiency) will increase. These results show the opposite result with the goal of spin-off policy, which is to enhance the performance of Islamic banks.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:56:y:2020:i:2:p:329-337

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DOI: 10.1080/1540496X.2018.1553162

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