Depositors’ Withdrawal Behavior in Indonesian Islamic Banks

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Purpose – This paper aims to investigate factors determining depositors’ withdrawal behavior based on the empirical survey of the Indonesian Islamic banking industry.

Design/methodology/approach – This paper conducts a direct survey towards Islamic banking depositors in Indonesia. Particularly, it uses a combination of open and close questions assessing information about depositors’ withdrawal behavior under different circumstances. Then, it analyzes such primary data with statistical tool to find information and factors determining depositors’ withdrawal behavior.

Findings – Firstly, the paper finds the general factors causing depositors to take their money which is if the Islamic banks do not comply with Sharia. Secondly, it finds the specific factors, which are: (i) the willingness to adjust the tenor of deposits, (ii) the need of funds for transactions and, (iii) less payment of return sharing on deposits than the previous period. Further, it is also found that depositors tend to deposit funds in Islamic banks rather than Islamic windows and most of them have income of less than Rp5 million per month. Meanwhile, with regard to interaction with the sources of information, news in the newspapers and news on the TV are the dominant ones influencing the depositors banking behavior. However, in the daily life, they interact intensively with internet. As such, this paper recommends Islamic banks to keep complying with Sharia and maintaining the robust performance in order to be able to pay positive and competitive return sharing on deposits. Further, they need to intensify internet banking facilities to conduct intensive communication with depositors, facilitate the depositors’ transactions and monitor their schedule of withdrawals to manage deposit withdrawals.

Originality/value – This paper conducts an empirical research on deposit withdrawals and provides useful recommendations for Islamic banks in Indonesia to manage the potential deposit withdrawal. The best of authors’ knowledge, this is the first paper trying to analyze the deposits’ withdrawal in Indonesian Islamic banking emphasizing on the psychological aspects of depositors to withdraw money and their interaction with the banks and media.

Paper type: Research paper

Keywords: Withdrawal risk, Islamic banking, Indonesia


Abduh, M., and Ismal, R. (2013). Depositors’ withdrawal behavior in Indonesian Islamic Banks. Australian Journal of Islamic Banking and Finance, Vol. 2 No.1., pp.1-20.

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