Impact of Spin-Off Policy on the Asset Growth on Indonesian Islamic Banking Industry

Abstract

The purpose of this paper is to analyze the impact of spin-off on asset growth on Islamic banking in Indonesia.This research used panel regression with random effect.The variable used in this paper is spin-off which is used as a dummy variable, and also included the internal factor of industry such as deposit and efficiency ratio (measured by BOPO).Besides the internal factor, this research also included the external factor such as inflation rate, economic growth rate, and net interest margin from conventional banking.The result shown that only deposits that had impact on asset growth of Islamic banks from spin-off result.The spin-off decision on this model doesn't have an impact on asset growth.There are three reasons why spin-off policy doesn't have yet an impact on asset growth: first, the Islamic banks that result from spin-off still use the facility on the parent's bank.Second, the Islamic bank needs a lot of capital to expand the facility.Third, Islamic banks resulted from spin-off still doing internal consolidation after the spin-off.

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