The Comparison of The Islamic and Conventional Bank Performance before and During Covid-19 Pandemic in Indonesia

Abstract

This research explains to test financial stability of banks during the crisis which is still being debated by taking the period before and after the covid 19 pandemics. This study uses a sample of all transactions of conventional banks and Islamic banks throughout Indonesia that are recorded by the Indonesian financial services authority. With a population of all conventional financial institutions and Islamic financial institutions, both registered and unregistered by Indonesian financial services authorities throughout Indonesia. Data sourced from the Indonesian financial services authority. Paper compares the performance of conventional banks with Islamic banks and the resilience of conventional banks and Islamic banks to shocks, an analysis of the financial behavior of data in commercial banks was carried out using Threshold Autoregressive. We find that Islamic banks tend to be more stable in facing financial challenges due to the COVID-19 pandemic compared to conventional banks. Performance of conventional banks was very good before the COVID-19 pandemic. However, when the coronavirus pandemic began to be reported, there was a huge decline in performance. Conventional bank recovery efforts have not been able to return to the original track. Conventional bank performance is slowing down, and it tends to be difficult to return to its original performance value (before the COVID-19 outbreak). However, from the graph of performance forecasting Islamic Commercial Banks and Conventional Banks, it is a difference in performance stability between Islamic Commercial Banks and Conventional Banks facing the COVID-19 pandemic.