Development of Islamic Banking and Economic Growth in Indonesia: Descriptive Analysis for The Period 2019–2024

Abstract

This study examines the development of Islamic banking and the dynamics of economic growth in Indonesia during 2019–2024. It applies a quantitative descriptive approach using secondary data from the Financial Services Authority of Indonesia (OJK) and Statistics Indonesia (BPS). Islamic banking indicators include total assets, financing, third-party funds, capital adequacy ratio, return on assets, gross non-performing financing, financing-to-deposit ratio, and operating expenses to operating income. Economic growth is represented by Indonesia’s real gross domestic product growth. The analysis compares annual changes, year-on-year growth, and three analytical phases: pre-pandemic, pandemic, and recovery. The descriptive evidence shows that Islamic banking assets increased from IDR538.322 trillion in 2019 to IDR980.296 trillion in 2024. Financing rose from IDR365.125 trillion to IDR643.546 trillion, while third-party funds increased from IDR425.290 trillion to IDR753.601 trillion. Economic growth contracted by 2.07% in 2020, recovered to 3.70% in 2021, and remained around 5% during 2022–2024. Gross non-performing financing declined from 3.23% to 2.11%, while the capital adequacy ratio remained above 20%. These findings indicate expanding intermediation and improving resilience in Islamic banking. Nevertheless, the study does not claim causality because the national annual sample contains only six observations. The contribution is a systematic descriptive account of Islamic banking development within the broader context of Indonesia’s post-pandemic economic recovery.