What is it about?
Murabahah is the most common financing method used by Islamic banks in Indonesia. In this system, the bank buys goods and sells them to customers at a fixed profit margin. But what factors actually determine how much profit the bank makes from these transactions? This study looks at three possible influences: The BI Rate, or Indonesia's central bank interest rate (even though Islamic finance is supposed to avoid interest), The operational costs banks incur to run their services, and The amount of money deposited by customers. By analyzing data from 2013 to 2018, we found that higher operational costs tend to increase Murabahah profit margins, suggesting banks may pass costs on to customers. Surprisingly, the BI Rate and customer deposits didn’t show a strong impact individually, although all three factors combined still played a meaningful role in shaping profits. The results show that Islamic banks should find better ways to manage their costs and rethink their use of interest-based benchmarks like the BI Rate to stay aligned with Islamic financial principles.
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Why is it important?
This study offers a rare, comprehensive look at what drives profit margins in Murabahah financing, the most widely used product in Indonesian Islamic banks. While many previous studies only examined one or two influencing factors, this research is the first to analyze the combined impact of central bank rates, operating costs, and customer deposits on Murabahah margins over a multi-year period (2013–2018). What makes this study especially timely is that it raises critical questions about Islamic banks' continued reliance on interest-based benchmarks, like the BI Rate, which may contradict core Sharia principles. As Islamic finance expands globally, the findings push the conversation forward about developing fairer, Sharia-compliant pricing systems and improving operational efficiency. This work not only contributes new insights for Islamic banking practitioners and regulators, but also supports broader efforts to align financial practices with ethical, faith-based standards—something increasingly relevant in today’s demand for ethical finance alternatives.
Perspectives
Writing this article has been both a challenging and rewarding experience. As someone deeply interested in how Islamic financial systems can remain true to their principles while operating in modern economies, I found this research especially meaningful. It allowed me to explore the tension between ethical ideals in Islamic finance and practical realities, like the use of interest-based benchmarks and the pressure to stay competitive. I hope this study encourages more scholars and practitioners to reflect critically on how we define compliance in Islamic banking—not just in terms of formality, but in spirit. Personally, this work has deepened my conviction that developing authentic, Sharia-based financial alternatives isn’t just desirable—it’s necessary. If this article sparks further discussion or inspires someone to look for better benchmarks or more ethical operational models, then I’ll consider it a small but meaningful contribution to the future of Islamic finance.
Yuli Andriansyah
Islamic University of Indonesia
Read the Original
This page is a summary of: Determinants of Murabahah Margin Income in Indonesian Islamic Commercial Banks, 2013–2018, Unisia, December 2023, Universitas Islam Indonesia (Islamic University of Indonesia),
DOI: 10.20885/unisia.vol41.iss2.art7.
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