Analysis of Efficiency Islamic Banking In Indonesia: Stochastic Frontier Approach

Abstract

This research to determine the efficiency of Islamic banking in Indonesia using a stochastic frontier approach. This research was conducted on general sharia banking in Indonesia. The research method used is calculating the efficiency of Islamic banks in terms of profit using an alternative profit efficiency approach method, while for calculations using the Stochastic Frontier Approach (SFA) approach which calculates deviations from the profit function estimated first with its profit frontier. The data used is secondary data, the data collection method comes from documentation. The data analysis used is quantitative. The results of this research show that the efficiency of sharia banking continues to increase every year. The magnitude of the increase was 87.97% in 2019 to 92.75% in 2020 or 96.66 in 2019. The average efficiency of sharia banking increased by 4.77% from 2019. Meanwhile, in 2021 the average efficiency experienced an increase of 0.86% from 2020 and in 2022 there was an increase of 3.04% from 2021. This can be interpreted that from 2019 to 2022 sharia banking experienced an average growth of 2.16% per the year.