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ANTECEDENTS OF SOCIAL FUNDS’ PRODUCTIVITY OF ISLAMIC BANKS IN INDONESIA
Corresponding Author(s) : Zulfikar Bagus Pambuko
Humanities & Social Sciences Reviews,
Vol. 8 No. 2 (2020): March
Abstract
Purpose: The study aims to analyse the social funds’ productivity of Islamic banks in Indonesia and the antecedents of it. The study will measure the social fund productivity followed by the investigation about the variable which can determine the Islamic bank productivity.
Methodology: The study conducted at nine Islamic banks Indonesia. Two stages of the Malmquist productivity index were applied to annual data from 2012-2018. The variables which are tested its effect on social funds’ productivity return on asset, operational efficiency, inflation, OPEC oil price, and economic growth.
Main Findings: social funds’ productivity of Islamic banks in Indonesia has experienced progress during the observation period. It is supported by the progress on technological change and efficiency change. The antecedents of social funds’ productivity return on asset and operational efficiency, while macroeconomics conditions have no significant effect on social funds’ productivity.
Applications of this study: This study enriches the research on Islamic banks and gives the recommendation for policymakers to supervise better and for banks’ managers to improve the social funds’ productivity.
Novelty/Originality of this study: This research is the preliminary study on the determinant of social funds’ productivity in Islamic banks.
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- Abbas, M., Hammad, R. S., Elshahat, M. F., & Azid, T. (2016). Efficiency, productivity and islamic banks: an application of DEA and malmquist index. Humanomics, 31(1), 118–131. https://doi.org/10.1108/H-03-2013-0022 DOI: https://doi.org/10.1108/H-03-2013-0022
- Afiatun, P., & Wiryono, S. K. (2010). Efficiency and productivity of Indonesian islamic banking. Jurnal Manajemen Teknologi, 9(3), 264–278.
- Akhtar, M. H. (2010). Are Saudi banks productive and efficient?International Journal of Islamic and Middle Eastern Finance and Management, 3(2), 96–112. https://doi.org/10.1108/17538391011054354 DOI: https://doi.org/10.1108/17538391011054354
- Arjomandi, A., Harvie, C., & Valadkhani, A. (2012). An empirical analysis of Iran’s banking performance. Studies in Economics and Finance, 29(4), 287–300. https://doi.org/10.1108/10867371211266928 DOI: https://doi.org/10.1108/10867371211266928
- Bahrini, R. (2015). Productivity of MENA islamic banks: a bootstrapped malmquist index approach. International Journal of Islamic and Middle Eastern Finance and Management, 8(4). https://doi.org/10.1108/IMEFM-11-2014-0114 DOI: https://doi.org/10.1108/IMEFM-11-2014-0114
- Baltagi, B. H. (2013). Econometric analysis of panel data, 5th edition. John Wiley and Sons. DOI: https://doi.org/10.1002/9781118445112.stat03160
- Boussofiane, A., Dyson, R., & Thanassoulis, E. (1991). Applied data envelopment analysis. European Journal of Operational Research, 52(1), 1–15. https://doi.org/10.1016/0377-2217(91)90331-O DOI: https://doi.org/10.1016/0377-2217(91)90331-O
- Caves, D. W., Christensen, L. R., & Diewert, W. E. (1982). The economic theory of index numbers and the measurement of input, output, and productivity. Econometrica, 50(6), 1393–1414. https://doi.org/10.2307/1913388 DOI: https://doi.org/10.2307/1913388
- Coelli, T., Rao, P. D. S., O’Donnell, C. J., & Battese, G. E. (2005). An introduction to efficiency and productivity analysis. Springer US. https://doi.org/10.1007/b136381 DOI: https://doi.org/10.1007/b136381
- Fare, R., Grosskopf, S., Norris, M., & Zhang, Z. (1994). Productivity growth, technical progress, and efficiency change in industrialized countries. The American Economic Review, 84(1), 66–83.www.jstor.org/stable/2117971
- Frimpong, K. A., Gan, C., & Hu, B. (2014). Cost efficiency of Ghana’s banking industry: a panel data analysis. Business and Finance Research, 8(2), 69–86.
- Guzmán, I., & Reverte, C. (2008). Productivity and efficiency change and shareholder value: evidence from the Spanish banking sector. Applied Economics, 40(15), 2033–2040. https://doi.org/10.1080/00036840600949413 DOI: https://doi.org/10.1080/00036840600949413
- Huang, M. Y., Juo, J. C., & Fu, T. tan. (2015). Metafrontier cost malmquist productivity index: an application to Taiwanese and Chinese commercial banks. Journal of Productivity Analysis, 44(3), 321–335. https://doi.org/10.1007/s11123-014-0411-1 DOI: https://doi.org/10.1007/s11123-014-0411-1
- Johnes, J., Izzeldin, M., & Pappas, V. (2015). Efficiency and productivity change in islamic and conventional banks: evidence from the gulf cooperation council (GCC) countries. 13th International Conference on Data Envelopment Analysis, April. http://eprints.hud.ac.uk/27824/ DOI: https://doi.org/10.2139/ssrn.2411974
- Kamarudin, F., Hue, C. Z., Sufian, F., & Anwar, N. A. M. (2017). Does productivity of islamic banks endure progress or regress?: empirical evidence using data envelopment analysis based malmquist productivity index. Humanomics, 33(1), 84–118. https://doi.org/10.1108/H-08-2016-0059 DOI: https://doi.org/10.1108/H-08-2016-0059
- Monetary Service Authority. (2019). Sharia banking statistics september 2019.https://ojk.go.id/id/kanal/syariah/data-dan-statistik/statistik-perbankan-syariah/Documents/Pages/Stastistik-Perbankan-Syariah---September-2019/Statistik Perbankan Syariah September 2019.pdf
- Nishimizu, M., & Page, J. M. (1982). Total factor productivity growth, technological progress and technical efficiency change: dimensions of productivity change in Yugoslavia, 1965-78. The Economic Journal, 92(368), 920–936. https://doi.org/10.2307/2232675 DOI: https://doi.org/10.2307/2232675
- Norfitriani, S. (2016). Analisis efisiensi dan produktivitas bank syariah di Indonesia sebelum dan sesudah spin off. Jurnal Ekonomi Syariah Indonesia, 6(2), 134–143. http://ejournal.almaata.ac.id/index.php/JESI/article/view/430
- Nuryanto, & Pambuko, Z. B. (2018). Eviews untuk analisis ekonometrika dasar: aplikasi dan interpretasi. Unimma Press.
- Olson, D., & Zoubi, T. (2017). Convergence in bank performance for commercial and islamic banks during and after the global financial crisis. Quarterly Review of Economics and Finance, 65, 71–87. https://doi.org/10.1016/j.qref.2016.06.013 DOI: https://doi.org/10.1016/j.qref.2016.06.013
- Pambuko, Z. B., Ichsan, N., & Anto, M. H. (2018). Islamic banks’ financial stability and its determinants: a comparison study with conventional banks in Indonesia. Iqtishadia: Jurnal Kajian Ekonomi Dan Bisnis Islam, 11(2), 371–390. https://doi.org/10.21043/iqtishadia.v11i2.3346 DOI: https://doi.org/10.21043/iqtishadia.v11i2.3346
- Pambuko, Z. B., Usman, N., & Andriyani, L. (2019). Spin-off and social funds’ productivity of islamic banking industry in Indonesia. First International Conference on Progressive Civil Society (ICONPROCS 2019), 7–10. https://doi.org/10.2991/iconprocs-19.2019.2 DOI: https://doi.org/10.2991/iconprocs-19.2019.2
- Pitaloka, J. M., Cholis, N., Islamiyah, A., & Pambuko, Z. B. (2018). Determinan produktivitas sosial perbankan syariah di Indonesia: two-stage malmquist productivity index. Li Falah Jurnal Studi Ekonomi Dan Bisnis Islam, 3(1), 36–40. http://ejournal.iainkendari.ac.id/lifalah/article/view/1186
- Renaud, F. (1971). Theory of cost and production functions. By R. W. Shephard. Princeton: Princeton university press, 1970. The Journal of Economic History, 31(3), 721–723. https://doi.org/10.1017/S002205070007457X DOI: https://doi.org/10.1017/S002205070007457X
- The act number 21 2008 about islamic banking, 1 (2008).
- Rodoni, A., Salim, M. A., Amalia, E., & Rakhmadi, R. S. (2017). Comparing efficiency and productivity in islamic banking : case study Indonesia, Malaysia and Pakistan. Al-Iqtishad: Journal of Islamic Economics, 9(2), 227–242. https://doi.org/10.15408/aiq.v9i2.5153 DOI: https://doi.org/10.15408/aiq.v9i2.5153
- Sharma, D., & K. Sharma, A. (2015). Influence of turbulent macroeconomic environment on productivity change of banking sector: empirical evidence from India. Global Business Review, 16(3), 439–462. https://doi.org/10.1177/0972150915569932 DOI: https://doi.org/10.1177/0972150915569932
- Sufian, F. (2007). Malmquist indices of productivity change in Malaysian islamic banking industry: foreign versus domestic banks. Journal of Economic Cooperation, 28(1), 115–150.
- Suzuki, Y., & Sastrosuwito, S. (2011). Efficiency and productivity change of the Indonesian commercial banks. International Conference on Economics, Trade and Development IPEDR. Vol. 7.
- Usman, N., Andriyani, L., & Pambuko, Z. B. (2019). Productivity of islamic banks in Indonesia: social funds versus financial funds. Journal of Asian Finance, Economics and Business, 6(3), 115–122. https://doi.org/10.13106/jafeb.2019.vol6.no3.115 DOI: https://doi.org/10.13106/jafeb.2019.vol6.no3.115
References
Abbas, M., Hammad, R. S., Elshahat, M. F., & Azid, T. (2016). Efficiency, productivity and islamic banks: an application of DEA and malmquist index. Humanomics, 31(1), 118–131. https://doi.org/10.1108/H-03-2013-0022 DOI: https://doi.org/10.1108/H-03-2013-0022
Afiatun, P., & Wiryono, S. K. (2010). Efficiency and productivity of Indonesian islamic banking. Jurnal Manajemen Teknologi, 9(3), 264–278.
Akhtar, M. H. (2010). Are Saudi banks productive and efficient?International Journal of Islamic and Middle Eastern Finance and Management, 3(2), 96–112. https://doi.org/10.1108/17538391011054354 DOI: https://doi.org/10.1108/17538391011054354
Arjomandi, A., Harvie, C., & Valadkhani, A. (2012). An empirical analysis of Iran’s banking performance. Studies in Economics and Finance, 29(4), 287–300. https://doi.org/10.1108/10867371211266928 DOI: https://doi.org/10.1108/10867371211266928
Bahrini, R. (2015). Productivity of MENA islamic banks: a bootstrapped malmquist index approach. International Journal of Islamic and Middle Eastern Finance and Management, 8(4). https://doi.org/10.1108/IMEFM-11-2014-0114 DOI: https://doi.org/10.1108/IMEFM-11-2014-0114
Baltagi, B. H. (2013). Econometric analysis of panel data, 5th edition. John Wiley and Sons. DOI: https://doi.org/10.1002/9781118445112.stat03160
Boussofiane, A., Dyson, R., & Thanassoulis, E. (1991). Applied data envelopment analysis. European Journal of Operational Research, 52(1), 1–15. https://doi.org/10.1016/0377-2217(91)90331-O DOI: https://doi.org/10.1016/0377-2217(91)90331-O
Caves, D. W., Christensen, L. R., & Diewert, W. E. (1982). The economic theory of index numbers and the measurement of input, output, and productivity. Econometrica, 50(6), 1393–1414. https://doi.org/10.2307/1913388 DOI: https://doi.org/10.2307/1913388
Coelli, T., Rao, P. D. S., O’Donnell, C. J., & Battese, G. E. (2005). An introduction to efficiency and productivity analysis. Springer US. https://doi.org/10.1007/b136381 DOI: https://doi.org/10.1007/b136381
Fare, R., Grosskopf, S., Norris, M., & Zhang, Z. (1994). Productivity growth, technical progress, and efficiency change in industrialized countries. The American Economic Review, 84(1), 66–83.www.jstor.org/stable/2117971
Frimpong, K. A., Gan, C., & Hu, B. (2014). Cost efficiency of Ghana’s banking industry: a panel data analysis. Business and Finance Research, 8(2), 69–86.
Guzmán, I., & Reverte, C. (2008). Productivity and efficiency change and shareholder value: evidence from the Spanish banking sector. Applied Economics, 40(15), 2033–2040. https://doi.org/10.1080/00036840600949413 DOI: https://doi.org/10.1080/00036840600949413
Huang, M. Y., Juo, J. C., & Fu, T. tan. (2015). Metafrontier cost malmquist productivity index: an application to Taiwanese and Chinese commercial banks. Journal of Productivity Analysis, 44(3), 321–335. https://doi.org/10.1007/s11123-014-0411-1 DOI: https://doi.org/10.1007/s11123-014-0411-1
Johnes, J., Izzeldin, M., & Pappas, V. (2015). Efficiency and productivity change in islamic and conventional banks: evidence from the gulf cooperation council (GCC) countries. 13th International Conference on Data Envelopment Analysis, April. http://eprints.hud.ac.uk/27824/ DOI: https://doi.org/10.2139/ssrn.2411974
Kamarudin, F., Hue, C. Z., Sufian, F., & Anwar, N. A. M. (2017). Does productivity of islamic banks endure progress or regress?: empirical evidence using data envelopment analysis based malmquist productivity index. Humanomics, 33(1), 84–118. https://doi.org/10.1108/H-08-2016-0059 DOI: https://doi.org/10.1108/H-08-2016-0059
Monetary Service Authority. (2019). Sharia banking statistics september 2019.https://ojk.go.id/id/kanal/syariah/data-dan-statistik/statistik-perbankan-syariah/Documents/Pages/Stastistik-Perbankan-Syariah---September-2019/Statistik Perbankan Syariah September 2019.pdf
Nishimizu, M., & Page, J. M. (1982). Total factor productivity growth, technological progress and technical efficiency change: dimensions of productivity change in Yugoslavia, 1965-78. The Economic Journal, 92(368), 920–936. https://doi.org/10.2307/2232675 DOI: https://doi.org/10.2307/2232675
Norfitriani, S. (2016). Analisis efisiensi dan produktivitas bank syariah di Indonesia sebelum dan sesudah spin off. Jurnal Ekonomi Syariah Indonesia, 6(2), 134–143. http://ejournal.almaata.ac.id/index.php/JESI/article/view/430
Nuryanto, & Pambuko, Z. B. (2018). Eviews untuk analisis ekonometrika dasar: aplikasi dan interpretasi. Unimma Press.
Olson, D., & Zoubi, T. (2017). Convergence in bank performance for commercial and islamic banks during and after the global financial crisis. Quarterly Review of Economics and Finance, 65, 71–87. https://doi.org/10.1016/j.qref.2016.06.013 DOI: https://doi.org/10.1016/j.qref.2016.06.013
Pambuko, Z. B., Ichsan, N., & Anto, M. H. (2018). Islamic banks’ financial stability and its determinants: a comparison study with conventional banks in Indonesia. Iqtishadia: Jurnal Kajian Ekonomi Dan Bisnis Islam, 11(2), 371–390. https://doi.org/10.21043/iqtishadia.v11i2.3346 DOI: https://doi.org/10.21043/iqtishadia.v11i2.3346
Pambuko, Z. B., Usman, N., & Andriyani, L. (2019). Spin-off and social funds’ productivity of islamic banking industry in Indonesia. First International Conference on Progressive Civil Society (ICONPROCS 2019), 7–10. https://doi.org/10.2991/iconprocs-19.2019.2 DOI: https://doi.org/10.2991/iconprocs-19.2019.2
Pitaloka, J. M., Cholis, N., Islamiyah, A., & Pambuko, Z. B. (2018). Determinan produktivitas sosial perbankan syariah di Indonesia: two-stage malmquist productivity index. Li Falah Jurnal Studi Ekonomi Dan Bisnis Islam, 3(1), 36–40. http://ejournal.iainkendari.ac.id/lifalah/article/view/1186
Renaud, F. (1971). Theory of cost and production functions. By R. W. Shephard. Princeton: Princeton university press, 1970. The Journal of Economic History, 31(3), 721–723. https://doi.org/10.1017/S002205070007457X DOI: https://doi.org/10.1017/S002205070007457X
The act number 21 2008 about islamic banking, 1 (2008).
Rodoni, A., Salim, M. A., Amalia, E., & Rakhmadi, R. S. (2017). Comparing efficiency and productivity in islamic banking : case study Indonesia, Malaysia and Pakistan. Al-Iqtishad: Journal of Islamic Economics, 9(2), 227–242. https://doi.org/10.15408/aiq.v9i2.5153 DOI: https://doi.org/10.15408/aiq.v9i2.5153
Sharma, D., & K. Sharma, A. (2015). Influence of turbulent macroeconomic environment on productivity change of banking sector: empirical evidence from India. Global Business Review, 16(3), 439–462. https://doi.org/10.1177/0972150915569932 DOI: https://doi.org/10.1177/0972150915569932
Sufian, F. (2007). Malmquist indices of productivity change in Malaysian islamic banking industry: foreign versus domestic banks. Journal of Economic Cooperation, 28(1), 115–150.
Suzuki, Y., & Sastrosuwito, S. (2011). Efficiency and productivity change of the Indonesian commercial banks. International Conference on Economics, Trade and Development IPEDR. Vol. 7.
Usman, N., Andriyani, L., & Pambuko, Z. B. (2019). Productivity of islamic banks in Indonesia: social funds versus financial funds. Journal of Asian Finance, Economics and Business, 6(3), 115–122. https://doi.org/10.13106/jafeb.2019.vol6.no3.115 DOI: https://doi.org/10.13106/jafeb.2019.vol6.no3.115