Islamic Bank Resilience: Financial and Sharia Performance During Covid-19 Pandemic in Indonesia

Abstract

This study investigates the resilience of Islamic banks during the Covid-19 pandemic using indicators of financial and sharia performance. The sample consists of 13 out of 14 Islamic banks registered with the financial services authority (OJK). One sample was excluded due to incomplete annual report data. The data assembled ranged from 2018, two years before Covid-19 until 2020 during the pandemic. Furthermore, the mean difference test was carried out on financial and sharia performance by comparing data before and during Covid-19. The results showed that during the pandemic, the financial performance proxied by capital adequacy ratio, non-performing financing, and financing to deposit ratio was higher, while profitability showed a decrease. Meanwhile, sharia performance, which reflects sharia principles and social values increased. Both performances were not significantly different when the data before and during the pandemic was compared. Therefore, Islamic banks show resilience when a crisis, specifically Covid-19 occurs.