The market share of Islamic banks never grew more than 5 percent until the end of 2015, more than two decades after the establishment of Indonesia’s first Islamic bank. With such stagnant growth, it was often said that local Islamic banks were in a 5 percent growth trap. By the end of 2016, the market share of Islamic banks had risen by 5.13 percent, but this was not because of an increase in the number of new customers, but because of the conversion of conventional regional banks in Aceh into Islamic banks. The situation raises a question as to why Indonesia, known as the largest Muslim-majority country in the world, with Muslims consisting 88 percent of the 2016 population of about 259 million people, shows such a low market share of Islamic banks. If we compare our Islamic banking market share to Malaysia’s, the figure is quite ironic. In Malaysia, the market shar...

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