The Social Role of Islamic Banks in Indonesia during the Pandemic of COVID-19
Reflection of Market Share
Keywords:
COVID-19; CSR; market share; social role
Abstract
The objective of this research is to reveal the social role of Islamic banks in Indonesia in helping the nation survive in the midst of COVID-19 pandemic in the context of market share. This research highlights Islamic commercial banks in Indonesia. The mixed research method under sequential explanatory model is used in this research. The result of this research demonstrates that banks with the largest magnitude have shown a fixed position. There is no change of position on their concentration ratio at pre and along pandemic period. The final result of this research finds that all the banks have implemented their social role in the midst of coronavirus outbreak through the donation. A self-protection assistance tool for health workers is the type of donation provided by all the banks. Further finding in this research reveals that the magnitude of market share owned by the banks tends to reflect types of social involvement.
References
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[40] G. Amoako, K. Dartey-Baah, N. Owusu-Frimpong, and C. Kebreti, “Corporate Social Responsibility: Perspectives of Foreign and Local Oil Marketing Companies in Ghana,” Communicatio, 2019, doi: 10.1080/02500167.2020.1723661.
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[2] Https://covid19.go.id, “Gugus Tugas Percepatan Penanganan COVID-19,” 2020. https://covid19.go.id/peta-sebaran (accessed May 01, 2020).
[3] A. W. A. Boot et al., “The coronavirus and financial stability,” SAFE Policy Lett., 2020.
[4] W. Ding, R. E. Levine, C. Lin, and W. Xie, “Corporate Immunity to the COVID-19 Pandemic,” SSRN Electron. J., 2020, doi: 10.2139/ssrn.3578585.
[5] A. Abbas, M. Ilham, N. Triani, A. Arizah, and W. O. Rayyani, “The Involvement of Firms in Helping Fight the Pandemic of COVID-19 : Evidence from Indonesia,” Inovbiz J. Inov. Bisnis, 2020, doi: 10.35314/inovbiz.v8i1.1314.
[6] OJK, “Indonesia Banking Statistics,” Ojk, 2019, doi: 10.1017/CBO9781107415324.004.
[7] OJK, “www.ojk.go.id,” Ototritas Jasa Keuangan, 2020. www.ojk.go.id.
[8] H. Mukhibad, “the Role of Sharia Supervisory Boards in Meeting Maqasid Syariah – Study on Islamic Banks in Indonesia,” Eur. J. Islam. Financ., no. 13, 2019, doi: 10.13135/2421-2172/3620.
[9] P. P. Biancone and M. Radwan, “Social Finance And Unconventional Financing Alternatives: An Overview,” Eur. J. Islam. Financ., 2018, doi: 10.13135/2421-2172/2818.
[10] P. P. Biancone and M. Radwan, “Social Finance and Financing Social Enterprises: An Islamic Finance Prospective,” Eur. J. Islam. Financ., 2019, doi: 10.13135/2421-2172/3176.
[11] Asyraf Wajdi Dusuki, “What Does Islam Say about Corporate Social Responsibility ?,” Rev. Islam. Econ., 2008.
[12] L. Planer-Friedrich and M. Sahm, “Strategic corporate social responsibility, imperfect competition, and market concentration,” J. Econ. Zeitschrift fur Natl., 2020, doi: 10.1007/s00712-019-00663-x.
[13] A. F. Forgione and C. Migliardo, “CSR engagement and market structure: Evidence from listed banks,” Financ. Res. Lett., 2020, doi: 10.1016/j.frl.2020.101592.
[14] J. C. Cuestas, Y. Lucotte, and N. Reigl, “Banking sector concentration, competition and financial stability: the case of the Baltic countries,” Post-Communist Econ., 2020, doi: 10.1080/14631377.2019.1640981.
[15] A. Abbas and A. Arizah, “Marketability, profitability, and profit-loss sharing: evidence from sharia banking in Indonesia,” Asian J. Account. Res., 2019, doi: 10.1108/ajar-08-2019-0065.
[16] D. M. Szymanski, S. G. Bharadwaj, and P. R. Varadarajan, “An Analysis of the Market Share-Profitability Relationship,” J. Mark., 1993, doi: 10.2307/1251851.
[17] M. Dumicic and T. Rizdak, “Determinants of banks’ net interest margins in Central and Eastern Europe,” Financ. Theory Pract., 2013, doi: 10.3326/fintp.37.1.1.
[18] J. A. Goddard, P. Molyneux, and J. O. S. Wilson, “Dynamics of Growth and Profitability in Banking,” J. Money. Credit. Bank., 2004, doi: 10.1353/mcb.2005.0015.
[19] J. Maudos and J. Fernández de Guevara, “Factors explaining the interest margin in the banking sectors of the European Union,” J. Bank. Financ., 2004, doi: 10.1016/j.jbankfin.2003.09.004.
[20] D. L. McLagan, “Market share: Key to profitability?,” Plan. Rev., 1981, doi: 10.1108/eb053944.
[21] A. C. Arize, I. N. Kalliantis, K. M. Kasibhatla, J. Malindretos, and L. E. Rivera-Solis, “Empirical Evidence on the Relationship Between Concentration and Profitability in Latin American Banking,” 2008. [Online]. Available: http://mpra.ub.uni-muenchen.de/34902/.
[22] Y. Tan, Efficiency and Competition in Chinese Banking. 2016.
[23] J. Cernohorsky, M. Nadrljanski, J. Grzinic, L. Kricenska, and K. Kowalczyk, “The Importance of Market Power in Banking: the Case Study of the Czech Republic,” 2020.
[24] S. W. G. Sahile, D. . Taurus, and T. . Cheruiyot, “Market Structure-Performance Hypothesis in Kenyan Banking Industry,” Int. J. Emerg. Mark., vol. 10, no. 4, pp. 697–710, 2015, [Online]. Available: https://www.emeraldinsight.com/doi/abs/10.1108/IJoEM-12-2012-0178%0D.
[25] Fredrick Onyango Ogola, “Market share as an indicator for corporate social responsibility (CSR) spending: The study of Coca Cola’s market,” AFRICAN J. Bus. Manag., 2012, doi: 10.5897/ajbm11.2133.
[26] C. Owen and R. Scherer, “Social Responsibility and Market Share,” Rev. Bus., 1993.
[27] A. B. Carroll, “A Three-Dimensional Conceptual Model of Social Performance A three-dimensional conceptual model of corporate performance,” Acad. Manag. Rev., 1979, doi: 10.2307/257850.
[28] A. B. Carroll and A. B. Carroll, “Three-Dimensional Conceptual Model of Corporate Performance,” Source Acad. Manag. Rev., 2008.
[29] P. C. Godfrey, C. B. Merrill, and J. M. Hansen, “The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis,” Strateg. Manag. J., 2009, doi: 10.1002/smj.750.
[30] A. B. Carroll and K. M. Shabana, “The business case for corporate social responsibility: A review of concepts, research and practice,” International Journal of Management Reviews. 2010, doi: 10.1111/j.1468-2370.2009.00275.x.
[31] P. A. Nguyen, A. Kecskés, and S. Mansi, “Does corporate social responsibility create shareholder value? The importance of long-term investors,” J. Bank. Financ., 2020, doi: 10.1016/j.jbankfin.2017.09.013.
[32] T. Chen, H. Dong, and C. Lin, “Institutional shareholders and corporate social responsibility,” J. financ. econ., 2020, doi: 10.1016/j.jfineco.2019.06.007.
[33] M. Friedman, “The Social Responsibility of Business is to Increase its Profits The New York Times Magazine,” The New York Times Magazine, 1970.
[34] C. M. Deegan, Financial Accounting Theory 4E. 2014.
[35] M. B. E. Clarkson, “A risk based model of stakeholder theory,” in Proceedings of the Second Toronto Conference on Stakeholder Theory, 1994.
[36] Lindblom, C.K. and C. K. Lindblom, “The implications of organizational legitimacy for corporate social performance and disclosure, Working Paper for the American Accounting Association Public Interest Section, USA,” 1994.
[37] W. Aerts and D. Cormier, “Media legitimacy and corporate environmental communication,” Accounting, Organ. Soc., 2009, doi: 10.1016/j.aos.2008.02.005.
[38] E. Colleoni, “CSR communication strategies for organizational legitimacy in social media,” Corp. Commun., 2013, doi: 10.1108/13563281311319508.
[39] M. Mocan, S. Rus, A. Draghici, L. Ivascu, and A. Turi, “Impact of Corporate Social Responsibility Practices on the Banking Industry in Romania,” Procedia Econ. Financ., 2015, doi: 10.1016/s2212-5671(15)00473-6.
[40] G. Amoako, K. Dartey-Baah, N. Owusu-Frimpong, and C. Kebreti, “Corporate Social Responsibility: Perspectives of Foreign and Local Oil Marketing Companies in Ghana,” Communicatio, 2019, doi: 10.1080/02500167.2020.1723661.
[41] J. W. Creswell, Research design: Qualitative, quantitative, and mixed methods approaches. 4th Edition. 2014.
[42] J. Benitez, L. Ruiz, A. Castillo, and J. Llorens, “How corporate social responsibility activities influence employer reputation: The role of social media capability,” Decis. Support Syst., 2020, doi: 10.1016/j.dss.2019.113223.
[43] M. Fatma, A. P. Ruiz, I. Khan, and Z. Rahman, “The effect of CSR engagement on eWOM on social media,” Int. J. Organ. Anal., 2020, doi: 10.1108/IJOA-10-2019-1895.
[44] L. Tang, “Media discourse of corporate social responsibility in China: A content analysis of newspapers,” Asian J. Commun., 2012, doi: 10.1080/01292986.2012.662515.
[45] Bank Mandiri Syariah, “Mandiri Syariah Serahkan 2.500 APD dan 100 Ribu Masker kepada RS Rujukan COVID-19,” mandirisyariah.co.id, 2020. https://www.mandirisyariah.co.id/news-update/berita/mandiri-syariah-serahkan-2500-apd-dan100-ribu-masker-kepada-rs-rujukan-covid-19 (accessed May 05, 2020).
[46] bnisyariah.co.id, “Ringankan Beban Masyarakat, BNI Syariah Salurkan Bantuan 5,7 Ton Beras ke Ojek Online dan Pedagang,” 2020.
[47] T. Zass, “Bantu Warga Terdampak Covid-19, Bank Aceh Syariah di Tapaktuan Serahkan Paket Senilai Rp 270 Juta,” https://aceh.tribunnews.com, 2020. https://aceh.tribunnews.com/2020/05/15/bantu-warga-terdampak-covid-19-bank-aceh-syariah-di-tapaktuan-serahkan-paket-senilai-rp-270-juta%0ACSR%0A (accessed May 10, 2020).
[48] J. S. Harrison and R. E. Freeman, “Stakeholders, social responsibility, and performance: Empirical evidence and theoretical perspectives,” Acad. Manag. J., 1999, doi: 10.2307/256971.
Published
2020-12-31
How to Cite
Abbas, A., & Frihatni, A. A. (2020). The Social Role of Islamic Banks in Indonesia during the Pandemic of COVID-19: Reflection of Market Share. European Journal of Islamic Finance, (16). https://doi.org/10.13135/2421-2172/4914
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Copyright (c) 2020 Ahmad Abbas, Andi Ayu Frihatni
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