Breaking the Murabahah Trap: How BSI's Merger, NPF, and Mudharabah Deposits Drive Profit-Sharing Financing in Indonesia

Abstract

This study aims to analyze the influence of Bank Syariah Indonesia (BSI) merger policies, Non-Performing Financing (NPF), and Mudharabah Deposit profit sharing rates on the distribution of profit-sharing financing in Indonesian Islamic banks. Profit-sharing financing (Mudharabah and Musyarakah) is a fundamental instrument that should be the hallmark of Islamic banks, but for more than two decades it has been consistently under the dominance of buying and selling-based financing (Murabahah). The BSI merger in February 2021 is suspected to be the catalyst for the financing paradigm shift. This study uses monthly time series data of the OJK Sharia Banking Statistics (SPS) for the period November 2014-January 2025 (119 observations) with the OLS multiple linear regression method. Dummy variables are used to quantify the impact of mergers. The results showed that (1) the BSI merger had a positive and significant effect (β = 1164.14; p = 0.0102), (2) NPF had a negative and significant effect (β = -850.42; p = 0.0000), and (3) the profit sharing rate of Mudharabah Deposits had a positive and significant effect (β = 521.10; p = 0.0023) on changes in profit sharing financing. The model was simultaneously significant (F = 14.36; p = 0.000) with Adjusted R² = 31.17%. These findings confirm the relevance of the Structure-Conduct-Performance (SCP) Theory in the context of Islamic banking consolidation and affirm that NPF control is a key prerequisite for accelerating profit-sharing financing.