THE IMPACT OF RISK MANAGEMENT IMPLEMENTATION ON THE PERFORMANCE OF ISLAMIC BANKING IN INDONESIA

Abstract

Risk management in Islamic banking in Indonesia follows the standards set by the Islamic Financial Services Board (IFSB), which are implemented proportionally according to each bank’s capacity. The Otoritas Jasa Keuangan (OJK) mandates these standards for Islamic Commercial Banks (BUS) and Sharia Business Units (UUS) to ensure compliance with Sharia principles. This study aims to examine the effect of risk management implementation on the performance of Islamic banks in Indonesia. The research employs an ex post facto design with a quantitative approach. Data were collected through questionnaires, observations, and documentation, and analyzed using validity, reliability, normality, linearity, and hypothesis testing through simple linear regression. The findings indicate that risk management implementation has a significant effect on the performance of Islamic banks. This is supported by the regression results processed using SPSS 25, which show a significance value of 0.000 < 0.05, a t-value of 7.165 greater than the t-table value of 1.986, and an R Square value of 0.363 (36.3%), implying that the remaining 63.7% is influenced by other factors not examined in this study. Therefore, the null hypothesis (Ho) is rejected and the alternative hypothesis (Ha) is accepted, leading to the conclusion that the implementation of risk management contributes 36.3% to the performance of Islamic banks in Indonesia.