Comparing Islamic Banks with Conventional Banks During a Monetary Crisis in Indonesia

English

Abstract

The Monetary Crisis is one of the problems that really overshadows every country. Because, this case can occur in any country, even including Indonesia. Indonesia itself has experienced several periods of monetary crises. During these periods, there were also several levels of problems faced by the country. So this also affects banks in Indonesia. These banks have different resilience when experiencing this crisis. The banks referred to in this study are conventional banks and Islamic banks. In this study specifically to compare the resilience of the two banks during the Monetary Crisis in Indonesia. This study uses a qualitative study literature method. We found that the resilience of conventional banks is known as fairly strong resilience. However, this was broken when there was an Islamic bank. Conventional banks by implementing the Time Value of Money became the weak points of conventional banks during this monetary crisis. In addition, conventional banks' ROA, ROE, NPF, and BOPO levels are higher than Islamic banks. The average ratio of profit to assets and capital of Islamic banks is lower than that of conventional banks. When compared to Islamic banks, of course this bank has good resilience during a monetary crisis. This is because Islamic banks implement a profitsharing system. Of course there is no interest rate at this bank because in Islam, interest or usury is forbidden in Islamic teachings. In addition, Islamic banking can be minimized or even avoided. For negative spillover effects, where banks still have to pay very high interest rates (financing costs) to borrowers, while customer rates cannot be adjusted or say deposits are higher than loans, resulting in losses for banks. and creditors can increase the default rate.