Market Risk Exposure in the Implementation of Profit Equalization Reserves in the Islamic Banking Industry

Lisa Yuni Lestari; M. Nanang Febrianto; Rokhmat Subagiyo; Muhammad Aswad; Binti Nur Asiyah

doi:10.70062/incoils.v5i1.354

Authors

Lisa Yuni Lestari UIN Sayyid Ali Rahmatullah Tulungagung
M. Nanang Febrianto UIN Sayyid Ali Rahmatullah Tulungagung
Rokhmat Subagiyo UIN Sayyid Ali Rahmatullah Tulungagung
Muhammad Aswad UIN Sayyid Ali Rahmatullah Tulungagung
Binti Nur Asiyah UIN Sayyid Ali Rahmatullah Tulungagung

DOI:

https://doi.org/10.70062/incoils.v5i1.354

Keywords:

Exposure, Islamic Banking, Market Risk , PER

Abstract

Islamic banking has faced market risks due to exchange rate fluctuations and changes in external conditions that can affect stability and profitability. Profit Equalization Reserve (PER) is applied as an instrument to minimize market risk. This study aims to analyze the role of PER in market risk exposure, the application of PER in Islamic banking in Indonesia and Malaysia, and assess the competitiveness of Islamic banks with conventional banks. The method used in this research is a qualitative method with a comparative approach based on secondary data from OJK, BNM, and Islamic bank financial reports to compare the two countries, Malaysia and Indonesia. The results reveals that PER is effective in stabilizing customer returns and minimizing market risk, including exchange rate and interest rate fluctuations. The application of PER in Malaysia is more structured with a maximum limit of 30% of investment profits, while in Indonesia it is still adjusted to the bank's internal policies. Islamic banks show strong competitiveness through third party funds stability, efficient profitability, and adaptive risk management strategies compared to conventional banks. Further research is expected to analyze in depth the exposure to market risk in the sustainability of the Islamic Banking Industry and the underlying regulations.

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