Purpose – This paper aims to study the competition that occurs in the Islamic Banking industry and to analyze the variables that affect the total revenue of Islamic Banking in Indonesia. Research Design, Data and Methodology – This study observed 10Islamic banks for the period 2010–2013. The annual data are taken from Direktori Perbankan Indonesia, published by Bank Indonesia, and annual report of the observed banks. In analyzing data, Panzar Rosse Approach was applied to analyze the type of Islamic Bank Market and Panel Regression Model for the estimated co-efficients has been used in the Panzar Rosse Approach. Results – Estimation model shows that all the banking cost elements such as the price of capital, unit price of labor, and unit prices of funds have significant positive correlation to Revenue as a dependent variable. The estimated value of H-statistic for the period 2010-2013 is 0.69. It can be interpreted that Islamic banking market in Indonesia shows monopolistic competition. Price of capital and funds has statistically significant effect on Bank’s Revenue. Conclusions – The study revealed that the Islamic banking market competition in Indonesia is monopolistic and the major contribution to the H-statistic comes from mainly price of funds.
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