The Impact Of Market Structure On The Performance Of The Islamic Banking Industry In Indonesia

Abstract

The relationship between market structure and performance has been studied meticulously by most countries around the world. The development of the Islamic banking market share that is sustainably developed over the years has made the curiosity whether the market structural changes affect the behaviour of the Islamic banking industry which even mean changing the market to be more competitive or more collusive. Which structure-conduct-performance hypothesis is supported in the Indonesian Islamic banking industry, the traditional, differentiation, or efficiency hypothesis? This study aims to analyse the impact of market structure on the performance of the Islamic banking industry in Indonesia which specifically also would like to prove whether market share and concentration in the Islamic banking industry are a proxy for efficiency. With the chosen method Panel data with 13 cross-sections and time series data from the first quarter of 2015 to the last quarter of 2021 and chosen model Fixed Effect Model. It came with the result that shows the efficient structural hypothesis is supported by the Indonesian Islamic banking industry which also means that the Islamic banking performance has been influenced by market share as a proxy to market structure with no collusion indeed.