EFFICIENCY ON ISLAMIC BUSINESS UNIT IN INDONESIA

Maya Panorama (2016) Efficiency On Islamic Business Unit In Indonesia

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ABSTRACT

Indonesia with the huge amount of Muslims has lot of potential in develop Islamic banking system. Higher motivation in acceleration progress of Islamic banking is followed by specific regulations made by Bank Indonesia. One of the regulation is about simplicity to establish the sharia system under conventional banks that we are familiar with Islamic business unit. This endorsement was followed by almost all banks in Indones ia, both commercial banks and regional banks to open Islamic business unit. However, when it comes to efficiency then there is a difference between these two banks even though both of them are Islamic business unit. This study‟s objectives are to measure t he efficiency level of Islamic business unit in Indonesia in RB and CCB and to identify the rank of Islamic Business unit in RB and CCB. Using a quarterly balanced panel data set from period 2005 until 2014; this research used Data Envelopment Analysis to measure the efficiency. Efficiency value that we measured is divided into the overall Technical Efficiency (TE), the Pure Technical Efficiency (PTE) and the Scale Efficiency (SE). To make the rank of efficiency of each Islamic Bank used the Anderson and Pe terson Super Efficiency Method.The result on efficiency found that Islamic Business unit still M efficient. We suggest that inefficient bank should learn from their benchmark and manage their input and output effectively

Keywords : Regional Bank, Commercial Bank, Islamic Business Unit, Efficiency, Rank

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