Does fintech peer-to-peer lending undermine the profitability of Islamic banks?
Empirical Evidence from Sharia Commercial Banks and Sharia Business Units in Indonesia
DOI:
https://doi.org/10.29040/jiei.v11i04.17335Keywords:
Fintech,P2P Lending, Islamic Bank, ROA,Bank ProfitabilityAbstract
Peer-to-peer lending within the financial technology sector has undergone significant expansion in Indonesia. Islamic banks, complying to Sharia principles, offer a distinct perspective within the peer-to-peer lending sector. This study aims to examine the impact of peer-to-peer lending on the profitability of Islamic banks in Indonesia. The dataset consists of 72 monthly time series from sharia commercial banks and sharia business units, obtained from the Financial Services Authority (OJK) covering the period from 2018 to 2023. The ECM Model is employed to assess the duration of the short-term imbalance that will endure over time. The return on assets functions as the dependent variable, whereas the independent variables comprise loan disbursement in fintech P2P lending, operating expense ratio , loan-to-asset ratio, branch banking, bank size, and BI rate. The data indicated that fintech has a significant and positive impact on the operations of sharia commercial banks. Other variables that significantly influence ROA include operating expense ratio (OER), loan-to-asset ratio, bank size, and BI rate. This finding highlights the strategic importance of collaborations between peer to-peer lending platforms and Islamic institutions.
References
Almulla, D., & Aljughaiman, A. A. (2021). Does financial technology matter? Evidence from an alternative banking system. Cogent Economics and Finance, 9(1). https://doi.org/10.1080/23322039.2021.1934978
Ath Thahirah, F., & Kasri, R. A. (2023). Does fintech threaten Islamic banking performance in Indonesia? Journal of Islamic Accounting and Finance Research, 5(1), 65–86. https://doi.org/10.21580/jiafr.2023.5.1.13745
Bernini, C., & Brighi, P. (2018). Bank branches expansion, efficiency and local economic growth. Regional Studies, 52(10), 1332–1345. https://doi.org/10.1080/00343404.2017.1380304
Chen, Z., Li, K., & He, L. Y. (2020). Has Internet Finance Decreased the Profitability of Commercial Banks?: Evidence from China. Emerging Markets Finance and Trade, 56(13), 3015–3032. https://doi.org/10.1080/1540496X.2019.1624159
Djalilov, K., & Piesse, J. (2016). Determinants of bank profitability in transition countries: What matters most? Research in International Business and Finance, 38, 69–82. https://doi.org/10.1016/j.ribaf.2016.03.015
Haddad, C., & Hornuf, L. (2023). How do fintech start-ups affect financial institutions’ performance and default risk? European Journal of Finance, 29(15), 1761–1792. https://doi.org/10.1080/1351847X.2022.2151371
Lv, S., Du, Y., & Liu, Y. (2022). How Do Fintechs Impact Banks’ Profitability?—An Empirical Study Based on Banks in China. FinTech, 1(2), 155–163. https://doi.org/10.3390/fintech1020012
Makmur, M., Taufq, M., Adisaputra, T. F., Adi, A., Novianti, D., Fisman, T., & Manajemen, A. ". (2023). Moneta : Jurnal Manajemen dan Keuangan Syariah Pengaruh BI rate dan nilai tukar mata uang terhadap profitabilitas bank yang terdaftar di Bursa Efek Indonesia [The influence of the BI rate and currency exchange rates on the profitability of banks listed on the Indonesia Stock Exchange ]. https://doi.org/10.35905/moneta.v2i1.5649
Monika, A., & Azam, A. N. (2021). The Impact of Fintech Development to Profitability of Islamic Bank. International Journal of Research and Review (Ijrrjournal.Com), 8, 1.
Phan, D., Kumar, P., Akhis, N., Hutabarat, R., Narayan, K., & Hutabarat, A. R. (n.d.). Do Financial Technology Firms Influence Bank Performance?
Putri, V. A., Futri, I. N., Risfandy, T., Reniati, R., & Fazlurrahman, H. (2024). How Does Fintech Lending Affect Islamic Local Banks’ Efficiency During COVID-19 Pandemic in Indonesia? International Journal of Economics and Management, 18(1), 127–143. https://doi.org/10.47836/ijeam.18.1.09
Sari, D. N. (2020). The effect of the growth of financial technology companies peer to peer lending on the performance of banking in Indonesia. Bulletin of Fintech and Digital Economy, 1(1), 42-60.
Sasmita Nugraha, Y., Ay, B., & Damayanti, R. (2019). Analisis Pengaruh Jumlah kredit, loan to asset ratio (LAR) dan loan to deposit ratio (LDR) terhadap non performing loan di PT Bank Rakyat Indonesia (Persero) Tbk cabang wonogiri tahun 2018 [Analysis of the Influence of the Number of Credits, Loan to Asset Ratio (LAR) and Loan to Deposit Ratio (LDR) on Non-Performing Loans at PT Bank Rakyat Indonesia (Persero) Tbk Wonogiri Branch in 2018] (Vol. 03, Issue 02).
Shihadeh, F., & Liu, B. (2019). Does Financial inclusion Influence The Banks Risk and performance? Evidence from global prospects. In Academy of Accounting and Financial Studies Journal (Vol. 23, Issue 3).
Tobing, J. D. T., & Wijaya, C. (2020). The effect of peer-to-peer lending and third-party payments on conventional commercial bank profitability in Indonesia. International Journal of Management, 11(5), 691–701. https://doi.org/10.34218/IJM.11.5.2020.062
Todorof, M. (2018). Shariah-compliant FinTech in the banking industry. In ERA Forum (Vol. 19, Issue 1). Springer Verlag. https://doi.org/10.1007/s12027-018-0505-8
UOB,PWC,SFA. (2022). Fintech in Asean 2022: Finance Reimagined. https://www.uobgroup.com/techecosystem/news-insights-fintech-in-asean-2022.html
UOB,PWC,SFA. (2023). Fintech in Asean 2023 : Seeding the green transition
https://www.uobgroup.com/techecosystem/news-insights-fintech-in-asean-2023.html
Wahyuni, S., Bustami, A., Fitriah, R. R. A., Af, M. S. F., & Yudaruddin, R. (2024). The impact of fintech peer-to-peer lending and Islamic banks on bank performance during COVID-19. Banks and Bank Systems, 19(1), 195–207. https://doi.org/10.21511/bbs.19(1).2024.17
Wang, R., Liu, J., & Luo, H. (2021). Fintech development and bank risk taking in China. European Journal of Finance, 27(4–5), 397–418. https://doi.org/10.1080/1351847X.2020.1805782
Yuliana, I. R., & Listari, S. (2021). Pengaruh CAR, FDR, Dan BOPO terhadap ROA Pada Bank Syariah Di Indonesia [The Influence of CAR, FDR, and BOPO on ROA in Islamic Banks in Indonesia]. Jurnal Ilmiah Akuntansi Kesatuan, 9(2), 309–334. https://doi.org/10.37641/jiakes.v9i2.870
Zheng, C., Rahman, M. A., Hossain, S., & Moudud-Ul-Huq, S. (2023). Does Fintech-Driven Inclusive Finance Induce Bank Profitability? Empirical Evidence from Developing Countries. Journal of Risk and Financial Management, 16(10). https://doi.org/10.3390/jrfm16100457
Published
How to Cite
Issue
Section
Citation Check
License
The copyright of the article fully belongs to the Jurnal Ilmiah Ekonomi Islam and publishing rights belong entirely to LPPM STIE AAS Surakarta
This work is licensed under a Creative Commons Attribution 4.0 International License.
