FOUR DECADES OF ISLAMIC BANKING IN INDONESIA: REGULATORY EVOLUTION, RESILIENCE, AND CHALLENGES IN THE ERA OF CONSOLIDATION
DOI:
https://doi.org/10.54783/sdp7w484Keywords:
Development of Islamic Banking, Initiation, Resilience, ConsolidationAbstract
Sharia banking in Indonesia is much younger than commercial banking. The development of the sharia banking industry has its own characteristics. This study attempts to examine the milestones that have occurred in Indonesia in terms of economic, social, and regulatory factors that have caused the sharia banking industry to enter a different phase from before. Based on regulatory milestones and economic conditions, there are four stages of development, namely the initiation stage, the resilience stage, the consolidation stage, and the globalization stage. These four stages have their own characteristics, and each stage forms the foundation for the next stage. Currently, Indonesia has entered the globalization stage with a merger facilitated by the government for state-owned banks to become Bank Syariah Indonesia. Despite the merger and the growth of the Islamic banking industry, which has grown by almost 10 percent a year, Islamic banking still has a market share of less than 10 percent compared to commercial banks, which have a market share of up to 90 percent. In the future, steps need to be taken to grow the market share of Islamic banking, starting with preparing regulations, human resources, and educating the public.
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