Islamic Banking Performance in Majority and Minority Muslim Region

Abstract

Islamic Banking attracted many consumers in many Muslim majority countries. The rules and obligation to follow the Islamic law is one of key factors that make this banking is popular in Muslim community. There is also interesting fact that many Non-Muslim also become customers of this Islamic Bank.  They found the business operation of Islamic Bank is interesting, with no interest and transparency. This study examines the collaboration and internal resources on Islamic Banking Performance with Majority and Minority Muslim Community region as moderator. Another objective of this study is to analyze the collaboration strategy as a mediator in the relationship between Innovation and Business Performance. This research used a quantitative method with structural equation modelling analysis. Data was collected from 300 Sharia bank executives throughout Indonesia. Data was processed using SmartPLS version 4.1.0 to analyze the hypotheses for this study. The results showed that Majority and Minority Region has no moderation impact to Collaboration on Business Performance (β = .03, p = .04), The Majority and Minority Region also has no moderation effect to Internal Resources on Business Performance (β =- .01, p = .75), Internal Resources impact to Business Performance (β =- .35, p = .00). Furthermore, Collaboration Strategy mediated the relationship between Internal Resources and Business Performance (β =- .16, p = .00). This research finds that Majority and Minority Region has significant direct effect on Business Performance