INEQUALITY AND CONCENTRATIO OF WEALTH: CRITICAL REVIEW OF SHARE HOLDING STRUCTURE ON INDONESIAN STATE-OWNED ISLAMIC BANKS
Cinantya Sriyono Putri- Firdan Thoriq Faza

Universitas Airlangga

Abstract

Purposes: In modern economic discourse, inequality and concentration of wealth have emerged as one of the main causes of instability and crisis. Unfortunately, although the Islamic banking industry has emerged as sharia-compliant banking, it still does not seem to be a concern about the existence of inequality and the concentration of wealth reflected in the ownership of shares in Bank Syariah Indonesia (BSI). This paper aims to explore the issue of inequality and concentration of wealth in the context of Islamic finance industry, especially Islamic banking.
Methods: Using library studies and secondary data this research highlights these issues based on Indonesia^s experience as it has just merged from several Islamic banks in Indonesia into 1 called BSI.
Results: BSI has not applied Islamic values and principles about the prohibition of concentration of wealth on a handful of parties only, which is reflected in the concentration of share ownership in Bank Syariah Indonesia by conventional banking up to 93%. The reduction in wealth concentration is not enough only be solved by redistribution of income through the Islamic alm methods but by means of the distribution of company shareholdings by the public.
Conclusion and suggestion: In order to increase the level of distribution of shareholdings at the public level, BSI can carry out corporate actions such as right issues, conduct ESOP programs, sell shares owned by parties concentrated in the exchange so that ownership by the public can increase. The government can also participate by issuing a policy of increasing the free float trade threshold and tax incentive policy for companies that are not concentrated in their shareholdings.

Keywords: Ownership structure, Concentration of wealth, Economic inequality, Islamic Bank

Topic: Income gap and poverty