Islamic Commercial Banks in Indonesia After the Financial Crisis

The performance evaluation of Islamic commercial banks compared to conventional banks after the financial crisis is very crucial in order to assess their survival. Although the conventional banks still dominate the market share but sharia banks are expected to grow in the next 5-10 years by 10 percent. This study evaluates the interbank performance of Islamic commercial banks from 1999-2004 or after the financial crisis vis-a-vis interest based conventional banks in Indonesia. The performance of shariah banks have reached considerable standard in implementing their role as financial intermediaries in Indonesia. The Islamic interbank study found that Bank Muamalat Indonesia performed better in terms of profitability and liquidity. Meanwhile there is no significant difference in performance between Islamic commercial banks and conventional banks in Indonesia.The analysis should help shed some light on real performance of national banking industry in Indonesia after the financial crisis and should be especially useful to banking practitioners, policy makers as well as academicians.