Differences of Islamic Bank Performance based on

Establishment Method: Evidence from Indonesia

Sylva Alif Rusmita

, Faralaily Erika Widijanto Putri, Noven Suprayogi,

and Vicky Vendy

Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga,

Indonesia

Abstract. A spin-off is required when a conventional bank has a UUS that has a

minimum asset value of 50% of the total value of the parent's assets. This

readiness is measured through company performance, such as performance. This

research becomes important to prove from various kinds of establishment which

gives the best performance. The results of this study can be taken into

consideration for banks before making the move to BUS rather the company

performance is maintained and has sustainable growth. The results of this study

are of the three policies proved that the establishment method has differences,

with further tests that the BUS with the method of acquisition and merger has

better efficiency and capital adequacy compared to other methods. While

liquidity and profitability is better to use a conversion method.

Keyword: Establishment Method

∙Efficiency∙Capital Adequacy∙ Liquidity∙

Profitability

1 Introduction

Islamic banking plays an important role in economic activities. The beginning of known

Islamic banks in Indonesia is since the establishment of Bank MuamalatIndonesia in

1991. At the beginning of its establishment, the existence of Bank MuamalatIndonesia

has not received optimal attention in the national banking industry order (Antonio M.

S., 2001). According to Nuzuliah (2014), the rapid development of Islamic banking in

Indonesia was triggered by a change in Law Number 7 of 1992 concerning banking to

Law Number 10 of 1998 which allows banks to implement a dual banking system.

Conventional banks that dominate the market begin to look and open Islamic business

units. Based on this law, it is permissible to allow conventional banks to open sharia

branches or even convert themselves into banks with sharia principles in total. The birth

of the Sharia Banking Law pushed the number of BUS in 2009 to 2010 from five BUS

to 11 BUS in less than two years (Otoritas Jasa Keuangan, 2010). In 2010 to September

2018, the BUS only increased by three to 14.

Rusmita, S., Putri, F., Suprayogi, N. and Vendy, V.

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia.

DOI: 10.5220/0010598800002900

In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting (MIICEMA 2019), pages 823-837

ISBN: 978-989-758-582-1; ISSN: 2655-9064

823

Table 1. List of Islamic Bank Establishments in Indonesia in 2018.

Bank Umum Syariah (BUS) The process of establishment

PT. Bank Aceh S

ariah Conversion PT Bank Aceh

PT. BPD Nusa Ten

ara Bara

Conversion BPD NTB

PT. Bank Muamalat Indonesia Pure S

ariah

PT. Bank Victoria Syariah Conversion Bank Swaguna by Bank

Victoria

PT. Bank BRI S

ariah Acquisition Bank Jasa Artha b

Bank BRI

PT. Bank Jabar Banten S

ariah Spin off

PT. Bank BNI S

ariah Spin off

PT. Bank Syariah Mandiri Conversion Bank Susila Bakti by Bank

Mandiri

PT. Bank Mega Syariah Conversion Bank Umum Tugu by Bank

PT. Bank Panin Dubai S

ariah spin off

PT. Bank Syariah Bukopin Acquisition Bank Perserikatan Indonesia

Bukopin

PT. BCA S

ariah Acquisition Bank UIB oleh BCA

PT. Bank Tabungan Pensiunan

asional S

ariah

Acquisition Bank Sahabat Purbadanarta by

BTPN

PT. Maybank Syariah Indonesia Joint Venture Maybank with Nusa

asional

Sumber: (Otoritas Jasa Keuangan, 2018)

UUS growth is less than the maximum compared to BUS growth. In accordance with

the Banking Law, spin off obligations must be planned and discussed in the Sharia

Division more seriously (Rustam, 2012). According to Rustam (2012), there are many

factors that cause UUS to develop less than the maximum. Some of these are inefficient

UUS operations, lack of product features developed by UUS, many UUS head office

policies that are less conducive, synergy with parents that are far from expectations,

and unsupportive working relationships. Under these conditions, the choice of spin off

must be prepared early by conventional banks. This spin off is expected to bring UUS

to become more independent and focused. Changes in conventional bank business

activities to Islamic banks have been regulated in Bank Indonesia Regulation Number

11/15 / PBI / 2009 concerning Changes in Conventional Bank Business Activities to

Sharia Banks (Bank Indonesia, 2007).

A spin-off is required when a conventional bank has a UUS that has a minimum

asset value of 50% of the total value of the parent's assets. This also applies to all UUS,

15 years after Law Number 21 Year 2008 was passed (until 2023). The provisions of

Article 68 indicate that a UUS which still has a conventional parent is ready to separate

from its parent, and become a sharia business entity. This readiness is measured through

company performance, such as financial performance and can be seen in terms of fixed

assets, third party funds, and five financial ratios, namely liquidity ratios measured by

NPF and FDR ratios, solvency ratios measured by CAR, rentability ratios measured

using ROA, and operational efficiency ratios measured using OER (Kasmir, 2008). The

effectiveness and efficiency of the company's activities are displayed in the financial

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

824

statements, and the company's goal to achieve optimal profit levels reflects the

performance of Islamic banks.

The performance of Islamic banks is an important key to determine the position of

Islamic banks in the banking world. In Indonesia, the performance of Islamic banks is

measured as reported by Bank Indonesia (BI) using financial information, such as

assets, financing, pooling of funds, capital, and profitability (Bank Indonesia, 2007).

This information is also used to measure the performance of conventional banks. But

in principle there is a difference between Islamic banks and conventional banks, namely

in Islamic banks there are profit sharing principles while in conventional banks use the

principle of interest (Antonio M. S., 2001). The performance of Islamic banks can be

measured in various aspects. In this study, aspects of Islamic bank performance used

are fixed assets, third party funds, and five 24 financial ratios, namely the ratio of

operational efficiency measured by OER, liquidity ratios measured by NPF and FDR,

profitability ratios measured by ROA, and solvency ratios measured by CAR (Kasmir,

2008).

In this study, researchers wanted to further test the research conducted by Nasuha

(2012), Siswantoro (2014) dan Al Arif (2017) comparing the three policies establishing

Islamic banks. Al Arif (2017) see that spin off policies affect financial performance

using influence analysis. The difference between this research and the previous research

is that this study uses MANOVA for different tests so that it really distinguishes inter-

bank performance after changing to BUS. This research becomes important to prove

from the way of their establishment which gives the best performance. So, based on the

description above, researchers are interested in researching more about "Differences of

Islamic Bank Performance Based on Establishment Method: Evidence from Indonesia.

In this case the researchers took samples from the BUS with the three methods of

separation, namely the way of spin off, acquisition and mergers, as well as conversion,

namely BNI Syariah, BJB Syariah, BRI Syariah, Bukopin Syariah Bank, Victoria

Syariah Bank, and Aceh Syariah Bank. Analysis of financial performance in this study

was seen from four variables. The financial performance used is OER, FDR, ROA, and

CAR.

The results of this study shows that there is a significant difference among three

establishment methods of Islamic banks. Further analysis using post-hoc test indicates

that Islamic banks established through acquisition and merger method have better

efficiency and capital adequacy compared to Islamic banks established using other

methods. While in terms of liquidity and profitability, Islamic banks established

through conversion method perform better than Islamic banks established using other

methods. It suggests that Islamic banks established either using acquisition and merger

method or conversion methods have better financial performance than Islamic banks

established using pure spin-off method.

The remainder of this paper is organised as follows. The second section briefly

discusses the literature review. The third section explains the research methodology

used in the study and hypothesis development. The empirical results and analysis are

discussed in the fourth section. Lastly, conclusions are drawn in the final section with

a brief explanation of the limitations and suggestions for future research.

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia

825

2 Literature Review

2.1 The Relationship between the Establishment of Islamic Banks and

Financial Performance

In Article 1 number 12 of Law No. 40 of 2007 concerning Limited Liability Companies,

the term spins off is called separation. According to the article, separation is defined as

a legal act carried out by a company to separate a business that is switched because the

law is to two or more companies or a part of the liability of the company is transferred

because it is legal to one or more companies. In addition to that, the ratification of Law

No. 21 of 2008 prompted the establishment of several Islamic banks by acquiring and

converting conventional banks to full-fledged Islamic banks. According to Adiwarman

Karim (2011), the establishment method of Islamic bank can be done through three

approaches, namely, first, acquisition and merger method. Conventional commercial

bank that already has Islamic banking unit acquires a relatively small bank and converts

it to afull-fledgedIslamic bank and then merges it with the already existed Islamic

banking unit.Second, conversion method. Conventional bank that donot havean Islamic

banking unit, acquires a relatively small bank and converts it to a full-fledgedIslamic

bank. Third, pure spin-off method. Conventional bank already has an Islamic banking

unit and then spins it off from the parent company(bank) so that an Islamic banking

unit becomesa full-fledgedIslamic bank.

Siswantoro (2014) in his article analyzes the performance of Islamic banks and

strategies after separation as an independent Islamic bank in Indonesia. The results

obtained explain that the capital injection from conventional parent banks should be

utilized optimally to increase the growth of the sharia bank resulting from the

separation. However, it must still be supported by effective management of the BUS

resulting from the separation. Hamid (2014) the results of his research related to the

impact of separation on profitability in the sharia banking industry in Indonesia,

explained that the separation policy applied to the sharia banking industry has a good

effect to increase profitability as measured by the Return on Assets (ROA) ratio. The

same is true of the research conducted Al Arif (2015) related to the separation and its

impact on third party funds in the sharia banking industry in Indonesia, the results

explain that the separation policy has a good impact on increasing the third party funds

of the sharia banking industry in Indonesia.

From the aspect of operational efficiency, Al Arif et al. (2018) explained that there

is an influence between the separation policy on the level of operational efficiency as

measured by the ratio of Operational Costs to Operating Income (OER) at Islamic

Commercial Banks, where the separation policy actually reduces the level of

operational efficiency in the Islamic banking industry in Indonesia. This shows that

after the separation policy was carried out, it resulted in the Islamic banking industry

being less efficient than before the separation policy was carried out. The research

conducted by Kusumawardani, Haryanto, and Wibowo (2006) concerning the

comparison of financial performance between Islamic banks and conventional banks

before and after financial regulation and the monetary crisis and took a case study of

Bank Muamalat Indonesia and four Conventional Commercial Banks, namely BTPN

Bank, North Sumatra Bank, Domestic Bank, and American Express Bank. The results

of the analysis are based on CAREL (Capital, Assets, Rentability, Earning, Liquidity)

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

826

bank financial ratios, which are represented by financial ratio indicators namely CAR,

NPF / NPL, ROA, ROE, OER, and FDR / LDR. The independent t-test statistical

method states that there are significant differences in financial performance except the

ROE ratio. There is only one bank that has a significant impact after the financial

regulation and the monetary crisis, the North Sumatra Bank. Sharia banks represented

by Bank Muamalat Indonesia have the best NPF and FDR financial ratios. The spin off

will certainly be related to the performance of a bank, because the spin off process

requires very large operational costs and this can affect the financial performance of

course there are adjustments from the bank that makes the spin off (Kurniawan, 2016).

Based on the various results obtained, showing that in general the spin-off to

become a BUS is one of the strategies that can be taken to develop the Islamic banking

industry in Indonesia. With the change in the status of a bank to become an independent

BUS, its operational activities will become wider and more focused on activities based

on sharia principles. With wider and optimal operational activities, it is expected to

expand investment and networks, so that it will increase revenue which has an impact

on improving bank performance.

The performance of Islamic banks is seen from the aspects of fixed assets, DPK,

OER, NPF, FDR, ROA, and CAR. Based on research conducted by Nasuha (2012), on

the asset, financing, third party fund, and NPF variables experienced differences in the

performance of Islamic banks in one year after the spin off. In addition, in research

conducted by Poerwokoesoemo (2016), on the CAR, ROA, OER, and NPF variables

there are differences in the performance of Islamic banks in one year after the spin off.

In this study, measuring whether there is a difference in performance one year before

and one year after becoming a BUS. In addition to measuring how the comparison

between the performance of Islamic banks with the three policies of the establishment

of Islamic banks after becoming BUS. Based on some research that has been done, it

proves that the policy of establishing Islamic banks is related to financial performance

that occurs in a system in Islamic banks.

3 Research Method

This approach uses quantitative analysis tools with several methods such as normality

test, homogeneity test, and different test. The main objective of this study is to analyze

the differences in the four performances of six Islamic commercial banks one year after

becoming a BUS and determine the comparison of the financial performance of Islamic

banks with the pure spin off, acquisition-merger, and conversion methods after

becoming a BUS. Types and Sources of Data Data used in this study are secondary data

from quarterly financial reports from each sample bank and Financial Services

Authority (OJK) within one year after the spin off.

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia

827

Table 2. List of Banks in the study Sample.

No. Sample Establishment method Annual report

BNI Syariah

BJB Syariah

Syariah BRI

Bank Syariah Bukopin

Bank Victoria Syariah

Bank Aceh S

ariah

spin off

Akuisisi-merger

Konversi

2010 & 2011

2009

2010 & 2011

2016 & 2017

3.1 Operational Variabel

The operational definition contains an explanation of the specifications of the variables

that have been identified, the measurement variables and the size scale used (Rusmita,

Sukmaningrum, and Amani (2018). The variables in this study are:

1. OER: used to measure the ability of bank management in controlling operational

costs to operating income and the smaller this ratio the more efficient operational

costs incurred by banks so that the possibility of the bank concerned in a

problematic condition is also getting smaller (Almilia, Luciana Spica and

Herdinigtyas (2005). OER of a bank can be calculated by the following formula:

OER = (𝑂𝑝𝑒𝑟𝑎t𝑖𝑜𝑛𝑎𝑙 Expenses/𝑂𝑝𝑒𝑟𝑎t𝑖𝑜𝑛𝑎𝑙 Revenue) X 100% (1)

2. Financing to Deposit Ratio (FDR): In the Islamic banking blueprint issued by

Bank Indonesia in 2002, the FDR was analogous to a Loan to Deposit Ratio

(LDR) at conventional banks. The higher the ratio gives an indication of the low

ability of the bank's liquidity concerned. According to Arifin (2009), The

following is the FDR calculation formula:

FDR = (Total financing/𝑇𝑜𝑡al third party fund) X 100% (2)

3. Return on Assets (ROA): ROA is a comparison between net income and average

assets of Zainul Arifin (2012) Zainul Arifin (2012). The greater the ROA of a

bank, the better the bank's position. According to Dendawijaya (2009), the ROA

amount of a bank can be calculated by the following formula:

ROA = (Income before tax/ average total asset) X 100% (3)

4. Capital Adequacy Ratio (CAR): Capital Adequacy Ratio (CAR) to determine

the ability of capital needed to absorb or lose Sharia Commercial Banks The

higher the CAR, the stronger the bank to buy credit risk. According to Kasmir

(2014), the CAR amount of a bank can be calculated using the following

formula:

CAR = (𝑀𝑜𝑑𝑎𝑙/ 𝐴𝑇𝑀𝑅) X 100% (4)

3.2 Data Analysis Technique

3.2.1 MANOVA One Way

Anova Multivariate is abbreviated to MANOVA. Another name for MANOVA is

Multivariate Path Analysis. MANOVA is a statistical technique that can be used

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

828

simultaneously to explore relationships between several categories of independent

variables and two or more dependent variables. MANOVA can be used if the response

value or the dependent variable is greater than or equal to two. MANOVA is the

development of analysis of variance (ANOVA) in which to measure the average

difference for two or more dependent variables based on one or several categorical

variables that act as predictors.

The basis for decision making in the MANOVA One Way test is to compare the

value of F with the value of F crit (F table). If the value of F (F arithmetic)> F crit (F

table) then H0 is rejected or there is a difference. If the value of F (F arithmetic) <F crit

(F table) then H0 is accepted or in other words there is no difference (Santoso, 2003).

The basis for decision making if based on a probability or significance value is to

compare the P-value with a significance value. Because the desired level of trust is

95%, the significance level is 100-95 = 5% or 0.05. So, if the significance or probability

value> 0.05 then H0 is accepted or in other words there is no difference. If the

significance value or probability value <0.05 then H0 is rejected or in other words there

is a difference (Santoso, 2003).

According to Santoso (2003) In testing MANOVA One Way, we also need several

assumptions that must be met just like ANOVA, namely:

1. The population to be tested is normally distributed.

2. All samples are independent.

3. There is a variance of the populations to be tested.

4. The samples tested are not related to each other.

The MANOVA One Way hypothesis:

H0: There is no significant difference in BUS financial performance with the three

methods of establishing Islamic banks.

H1: There is a significant difference in BUS financial performance with the three

methods of establishing Islamic banks

3.2.2 Post Hoc

Post hoc test is used to examine differences in financial performance and policy

establishment before and after becoming a BUS, in addition to finding out which is

better. In the post hoc test if the data has the same variance as evidenced in the

homogeneity variance test where the probability value> 0.05, then the post hoc test can

be performed by selecting one of the options in equal variances assumed, namely LSD.

If the data is proven to have a different variance as evidenced in the variance

homogeneity test where the probability value <0.05, the post hoc test can still be

performed by selecting one of the tests in equal variance not assumed, namely howell

games (Trihendradi, 2009). If the significance level> 0.05 then there is no significant

difference, whereas if the significance <0.05 then there is a significant difference. In

addition, the post hoc test results table will show the * (star) symbol in the mean

difference column to make it easier to indicate significant differences (Trihendradi,

2009). The positive mean difference value means that it indicates that the variable is

the best (Hidayat, 2010).

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia

829

Fig. 1. Teknik Analisis Data.

4 Result and Analysis

4.1 Homogenitas Test

The MANOVA test as inferential statistics (parametric statistics) requires normal

distribution of data and homogeneity of variance / covariance of dependent variable

data. Homogeneity test aims to test whether the dependent variable has the same

variance in each category of independent variables. The results of the MANOVA

homogeneity test can be seen in Table 3 below:

Table 3. Uji Homogenitas MANOVA.

Variable Sig.

OER 0,321

FDR 0,071

ROA 0,165

CAR 0,001

Sumber: Uji SPSS 22 (data diolah)

Sharia bank performance can be said to be homogeneous if the data meets the

assumption of homogeneity with a significance value> 0.05, otherwise if the data has a

significance value <0.05 then it is said that the data variants are not the same or

heterogeneous. Based on the homogeneity test in Table 4.19 it can be obtained that the

OER, FDR, and ROA variables have homogeneous data, because the significance level

of the two banks is> 0.05.

While the CAR variable has a significance level <0.05, then the data can be said to

be variable data variants in the three methods of separation are not the same. The results

of the variance-covariance homogeneity test were not met, but the multivariate

normality test for the above case was met. However, analysis can still be continued for

MANOVA calculations using MANOVA testing decisions. So it can be concluded that

MANOVATestandPostHoc

spinoff:

BNISyariah

BJBSyariah

akuisisiandmerger:

BRISyariah

BankSyariahBukopin

konversi

BankVictoriaSyariah

BankAcehSyariah

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

830

the four variables consisting of OER, FDR, ROA, and CAR can be continued by

conducting a hypothesis test that is the One Way MANOVA test.

4.2 MANOVA One Way Test

MANOVA One Way is used to see the effect of predictor variables on response.

MANOVA in this study is used to compare the four dependent variables of each bank

grouped based on the method of establishing Islamic banks. After analysis, the results

of the One Way MANOVA table are obtained as follows:

Table 4. Uji MANOVA One Way.

Tests of Between-Subjects Effects

Source

Dependent

Variable

Type III Sum

of Squares

Df Mean Square F Sig.

Corrected

Model

OER 27809.471

2 13904.735 131.716 .015

FDR 3224.462

2 1612.231 4.806 .019

ROA 86.775

2 43.388 5.263 .014

CAR 6176.829

2 3088.415 23.448 .000

Intercept OER 308520.586 1 308520.586 113.828 .000

FDR 32270.830 1 32270.830 96.204 .000

ROA .810 1 .810 .098 .757

CAR 30654.198 1 30654.198 232.730 .000

METODE OER 27809.471 2 13904.735 5.130 .015

FDR 3224.462 2 1612.231 4.806 .019

ROA 86.775 2 43.388 5.263 .014

CAR 6176.829 2 3088.415 23.448 000

Error OER 56918.497 21 2710.405

FDR 7044.240 21 335.440

ROA 173.125 21 8.244

CAR 2766.028 21 131.716

Total OER 393248.553 24

FDR 42539.531 24

ROA 260.710 24

CAR 39597.055 24

Corrected

Total

OER 84727.968 23

FDR 10268.702 23

ROA 259.900 23

CAR 8942.857 23

a. R Squared = .328 (Adjusted R Squared = .264)

b. R Squared = .314 (Adjusted R Squared = .249)

c. R Squared = .334 (Adjusted R Squared = .270)

d. R Squared = .691 (Adjusted R Squared = .661)

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia

831

Based on the table above, it can be seen in the method row. Where there are four more

lines, namely OER, FDR, ROA, and CAR. That explains that each row shows a

different test result of one variable, namely the method of each dependent variable.

From the results above, it can be seen in the Sig. (significant if the Sig. value <0.05),

the first variable, OER, indicates a significance level of 0.015. These results indicate a

significance level of less than 0.05 which means the initial hypothesis was rejected,

which indicates a significant difference between the three policies establishing Islamic

banks after becoming a BUS.

The second variable, FDR, shows a significance level of 0.019. These results

indicate a significance level of less than 0.05 which means the initial hypothesis was

rejected, which indicates a significant difference between the three policies establishing

Islamic banks after becoming a BUS. The third variable, ROA, shows a significance

level of 0.014. These results indicate a significance level of less than 0.05 which means

the initial hypothesis was rejected, which indicates a significant difference between the

three policies establishing Islamic banks after becoming a BUS.

The last variable, CAR, shows a significance level of 0,000. These results indicate

a significance level of less than 0.05 which means the initial hypothesis was rejected,

which indicates a significant difference between the three policies establishing Islamic

banks after becoming a BUS. The conclusion of the MANOVA One Way test

conducted on the four variables taken into account in Islamic banks after becoming a

BUS in this study shows that all variables have significant differences in the three

policies establishing Islamic banks.

4.3 Post Hoc Test

Once it is known that there are differences between the three policies, a post hoc test

will then be performed to find out which variables are different. Post hoc test results

can be seen in the following table.

It is known from the table below that the variance of the OER, FDR, and ROA

variables are the same, so the post hoc test used is the LSD test. For CAR variables use

the games-howell test. It is said that there are differences in the performance variables

of Islamic banks, which are based on the policy of establishing Islamic banks if they

have a star sign (*) and have a significance <0.05. The best method is shown with a

positive mean difference (Hidayat, 2010).

In this study, for the difference in the OER variable, there is a significant difference

in the acquisition-merger method with the conversion method with a significant value

of 0.005 and has a mean different 82.2688, so it can be concluded that the OER on the

acquisition-merger is higher than the conversion.

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

832

Table 5. Post Hoc Result.

Multiple Comparisons

Dependent

Variable

(I) METODE (J) METODE

Mean

Difference(IJ)

Std. Error Sig

OER Spin Off

Akuisisi dan Merge

-29.3800 26.03077 .272

Konversi 52.8887 26.03077 .055

Akuisisi dan Merger

Spin Off 29.3800 26.03077 .272

Konversi 82.2688* 26.03077 .005

Konversi Spin Off -52.8887 26.03077 .055

Akuisisi dan Merge

-82.2688* 26.03077 .005

FDR Spin Off

Akuisisi dan Merge

-16.8964 9.15751 .079

Konversi -28.2085* 9.15751 .006

Akuisisi dan Merger

Spin Off 16.8964 9.15751 .079

Konversi -11.3121 9.15751 .230

Konversi

Spin Off 28.2085* 9.15751 .006

Akuisisi dan Merge

11.3121 9.15751 .230

ROA Spin Off

Akuisisi dan Merge

.9812 1.43562 .502

Konversi -3.4525* 1.43562 .025

Akuisisi dan Merger Spin Off -.9812 1.43562 .502

Konversi -4.4338* 1.43562 .006

Konversi

Spin Off 3.4525* 1.43562 .025

Akuisisi dan Merge

4.4338* 1.43562 .006

CAR

Spin Off

Akuisisi dan Merge

-23.7763* 5.73837 .000

Konversi 15.2075* 5.73837 .015

Akuisisi dan

Merger

Spin Off 23.7763* 5.73837 .000

Konversi 38.9838* 5.73837 .000

Konversi

Spin Off -15.2075* 5.73837 .015

Akuisisi dan Merge

-38.9838* 5.73837 .000

Sumber: Hasil SPSS 22 (data diolah)

Furthermore, for the difference in the FDR variable, there is a difference in the pure

spin off method with the conversion method because it has a significance <0.05 or equal

to 0.006. Between pure spin off and conversion methods have a mean difference of

28,2085. This shows that the FDR with the conversion method is higher than the pure

spin off method.

ROA variable differences are found in all separation methods. Pertaman there is a

difference in the conversion method with the pure spin off method, with a significance

of 0.025 and a mean different of 3.4525. Based on the mean difference between

conversion and pure spin off, the conversion ROA is higher than pure spin off. Secondly

there are differences in the conversion method with the acquisition-merger method with

a significance of 0.006 and mean different 4.4338. Based on the mean different number

between conversion and merger acquisition, the conversion ROA is higher than merger

acquisition. Meanwhile between merger-acquisition and pure spin-off is not significant.

Based on post hoc analysis data, the conversion method has the highest ROA.

For differences in CAR variables, there are differences in all separation methods,

with significance <0.05 and positive. First, between pure spin off and conversion with

a significance value of 0.015 and mean different 15.2075. This means that the CAR on

the pure spin off method has a higher CAR than Conversion. Second, the acquisition

and merger method with pure spin off has a significance of 0,000 and a mean different

of 23.7763, meaning that the CAR on the acquisition and merger method is higher than

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia

833

pure spin off. Third, the method of acquisition and merger with conversion has a

significance of 0,000 and a mean different of 39.9838, meaning that the CAR on the

acquisition and merger method is higher than conversion. If the three methods are

sorted, the highest CAR is acquisition and merger, then CAR with pure spin off method

and the last CAR is the conversion method.

The conclusion of the post hoc test conducted on the four variables taken into

account in Islamic banks after becoming a BUS in this study shows that:

1. OER acquisition and mergers are the highest compared to conversions

2. FDR conversion is higher than pure spin off

3. ROA conversion method is higher than merger acquisition and pure ROA

4. The highest CAR is acquisition and merger, then CAR with pure spin-off method

and finally CAR on the conversion method.

5 Analysis

Based on the results of the MANOVA One Way test of Operational Income Operational

Costs (OER), Financing to Deposit Ratio (FDR), Return on Assets (ROA), Capital

Adequacy Ratio (CAR) of Islamic banks after becoming BUS, there are significant

differences between the three establishment policies Islamic Bank.

Judging from the results of the post hoc test, the OER variable on the acquisition

and merger methods has a higher OER than the conversion. OER is a reflection of

efficiency ratio, the higher the OER, the more inefficient the company shows. A high

OER indicates inefficiency between operating costs and revenue. Based on the financial

statements 1 year after becoming a Sharia OER Commercial Bank, acquisition and

mergers are the highest compared to conversions. Inefficient OER could be due to the

Bukopin Syariah NPF increasing in the first year after becoming a BUS and added to a

fall in return. Declining returns could be due to bad financing, according to Indrajaya,

(2019) the accumulation of non-performing financing in economic activities financed

by banks may cause problems for the continuity of bank operations, which if it exceeds

certain limits has the potential to stop bank activities.

Whereas Islamic banks with conversion methods (Bank Victoria Syariah and Bank

Aceh Syariah) have the most efficient OER compared to others. At Bank Victoria

Syariah and Bank Aceh Syariah, in one year there was an increase in return so that the

efficiency ratio could be reduced by 1 year after becoming a Sharia Commercial Bank.

Table 6. Islamic Bank Efficiency Average.

No. Sample Spin-off method OER Ratio

BNI Syariah

BJB S

ariah

Murni spin off

87.03

86.51

Rata-rata 86.77

BRI Syariah

Bank S

ariah Bukopin

Akuisisi-merger

kuisisi-mer

90.095

112.503

Rata-rata 101.229

Bank Victoria Syariah

Bank Aceh Syariah

Konversi

86.64

83.3525

Rata-rata 84.9963

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Whereas the FDR variable conversion method is higher than the pure spin off method,

in other words the pure spin off method has a smaller spin off.

Table 7. Sharia Bank Liquidity Average.

No. Sample Spin-off method FDR Ratio

BNI Syariah

BJB S

ariah

Murni spin off

14,7558

34.6622

Rata-rata 24.7009

BRI Syariah

Bank S

ariah Bukopin

Akuisisi-merger

kuisisi-mer

36.5119

13.2717

Rata-rata 24.8918

Bank Victoria Syariah

Bank Aceh Syariah

Konversi

2.0951

76.1125

Rata-rata 39.1038

FDR is a reflection of bank liquidity, the conversion method has the highest FDR on

average compared to pure spin-off, meaning that Islamic banks which through

conversion tend to provide more financing than Islamic banks with other methods.

However, in the conversion method Bank Victoria Syariah has the lowest FDR, while

Bank Aceh Syariah has the highest FDR.

At Bank Victoria Syariah can be said to have the best liquidity due to low FDR, the

financing data of Bank Victoria Syariah decreased within 6 months after the spin off,

this could be due to the process of adjusting contracts and contracts. This conversion

method converts conventional banks to sharia banks directly so that contract and

contract adjustments are needed to be in accordance with sharia. Aside from low

financing, depositors of Bank Victoria Syariah continue to increase, this also triggers

the liquidity of Bank Victoria Syariah in the worst position.

Bank Aceh Syariah has the lowest liquidity among others. Funding in the sharia

scheme has actually begun since 2004. After the conversion, the liquidity of Bank Aceh

Syariah did not experience significant changes and changes in the contract and contract

of the Bank did not experience many difficulties because Bank Aceh had sharia branch

offices (not UUS) before the change. FDR also tends to be stable and does not

experience liquidity problems, when viewed from the NPF it tends to go down and

ROA also increases.

The greater the financing provided, the more benefits will be obtained. Based on

various results obtained, it shows that the policy of establishing a bank to become a

Sharia Commercial Bank (BUS) is one of the business strategies that can be taken to

develop the sharia banking industry. If based on Post hoc test data and average data,

the one with the highest ROA is the conversion method. Bank Aceh Syariah which

tends to have a stable and increasing ROA. Bank Victoria Syariah also has an ROA

which shows the increase after becoming a Sharia Bank. In the BRIS after Spin off

BRIS decreased ROA. While what happened at Bukopin Syariah Bank, ROA has

increased every 3 months but runs very slowly, so that within 1 year after the spin off

it has only shown positive ROA before 3 months in a row having negative ROA.

CAR is a ratio that reflects the ratio of capital adequacy in providing funds used to

overcome the possibility of risk. The highest CAR is acquisition and merger, then CAR

Differences of Islamic Bank Performance based on Establishment Method: Evidence from Indonesia

835

with pure spin-off method and finally CAR on the conversion method. In the CAR ratio,

the Post hoc test results show that there are significant differences between all methods

of separation of Islamic banks and of the three methods, the acquisition and merger

have the most different CARs. Islamic banks resulting from the acquisition and merger

experience a very striking difference because in the merger process, if the assets being

merged are assets that are not good then it will add to the burden of risk-weighted assets

according to risk. But it could also be considered better because after becoming a BUS,

Islamic banks get a large injection of funds from their parent bank. Then from the

merger process there is a merging of capital between merged banks.

However, this separation policy is not the final goal of the development of the

Islamic banking industry, many things need to be prepared related to the separation of

Islamic business units to become Islamic banks. According to Tubke (2004) there are

several factors that influence the process of establishing an Islamic bank. First, factors

related to business activities. In this factor, related to company size and business sector

differences between the parent company and its subsidiary companies. Second, factors

related to the organization and management of the company. Third, factors related to

relationships and support. There are three patterns of relationships that might be created

between a parent company and a subsidiary that makes a separation, namely market-

relatedness, product-relatedness, and technology-relatedness. Fourth, the transfer factor

or transfer in the form of transfer of experience from the parent company to its

subsidiary companies. Fifth, factors related to motivation. Finally, factors related to the

business environment.

6 Conclusion

The core objective of this study is to empirically examine whether there is a significant

difference among three establishment methods of Islamic banks, namely acquisition

and merger method, conversion method and pure spin-off method. Afterwards, this

study seeks to test which establishment method that gives the best financial

performance of Islamic banks. This study uses the sample of all 6 spin-off Islamicbanks

in Indonesia for the period of one year after spin off.

This study found that the conversion method is superior in efficiency, liquidity and

profit compared to other methods. As for the solvency capability of the acquisition and

merger method, the highest position. From the findings of this study, it can be seen how

the differences in the performance of Islamic banks of the three Islamic banking

establishment policies. In addition, it is hoped that this research can provide information

and considerations before implementing the Islamic banking establishment policy. In

addition, without changing the theme of this study, it is recommended that future

studies be able to use more samples and use different methods. So it can be known to

increase the validity of the results of the study.

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