Abstract:
This study examines the influence of internal and external
factors on the market share of Islamic banking in Indonesia
during the period from 2011 to 2019. Internal factors consist of
the number of Islamic Banks, while external factors consist of
Bank Indonesia’s (BI) interest rates, inflation, and GDP. During
the observation period, the data was normally distributed, with
no heteroscedasticity or autocorrelation detected. However,
due to multicollinearity, a stepwise regression test was
conducted, resulting in the exclusion of the variables Number of
Islamic Banks, CAR, and NPF
The findings of this study indicate that GDP has a negative and
significant effect on the market share of Islamic banking in
Indonesia, BI interest rate have a negative and significant effect
on the market share of Islamic banking in the country,
meanwhile inflation has a positive and significant effect on the
market share if Islamic banking in Indonesia. The conducted
study is consistent with Indonesia’s economic growth data from
2011 to 2019, which showed a decline compared to previous
years. Therefore, Islamic banks should be cautious about
external factors, as they have significant impact on the market
share of Islamic banks in Indonesia.
