Mergers of Indonesian Islamic Banks: How the Capital Market React?


  • Yadi Suryadi Universitas Gadjah Mada
  • Wuri Handayani Universitas Gadjah Mada



Mergers and acquisitions, Abnormal return, Trading volume activity, Corporate action, Capital market reaction


This study investigates the response of the Indonesian capital market to the announcement of mergers involving BRI Syariah, BNI Syariah, and Bank Syariah Mandiri, resulting in the establishment of a new entity known as Bank Syariah Indonesia. Employing an event study methodology, this study adopted a time frame of 120 days, comprising a window period of 20 days (consisting of 10 days both before and after the event date). The market model approach was employed to ascertain the abnormal return value observed during the event period. In order to test the hypotheses, this research employed the one-sample t-test for datasets with normal distribution characteristics and the Wilcoxon signed-rank test for datasets that did not conform to a normal distribution. The findings of the study indicated a favorable market reaction, characterized by the disparity in Average Abnormal Return (AAR) following the event date, with a significance value (two-tailed) of 0.027, which was below the 0.050 level of significance. Furthermore, from the perspective of Average Trading Volume Activity (ATVA), a positive reaction was also discerned, as evidenced by the contrast in ATVA during the window period, yielding a significance value (two-tailed) of 0.028, also falling below the 0.050 level of significance. These outcomes offer an enhanced comprehension of how the Indonesian capital markets respond to such mergers, thereby serving as a valuable reference for stakeholders when formulating investment decisions and market strategies.

Author Biography

Wuri Handayani, Universitas Gadjah Mada

Accounting department SINTA ID| Scholar | Scopus ID


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