Determinants of Islamic Banks’ Profitability in Indonesia (original) (raw)
Related papers
Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE), 2021
Indonesia is a country that adheres to a dual banking system, namely conventional and Islamic Banking. The growth rate of Islamic banking in the last three years is higher than conventional banking. However, in total assets, Islamic banking is still far behind conventional banking. Therefore, it is necessary to study further the performance of Islamic banking reflected in its profitability. So, it becomes an alternative input in determining Islamic banking policies. This study aims to know the factors affecting the profitability (ROA) of Islamic Banking in Indonesia. The data used are the 2014-2020 monthly data in the amount of 79 data. The method used in this study is a Vector Error Correction Model (VECM) to determine the effect of long-run and short-run relationships. The results of the study showed that the long-run relationship of the NPF variable affected and was significant positive toward ROA, CAR affected and was significant negative toward ROA, while the inflation variable...
Objective-Islamic Banks have a distinct advantage that is not only conduct a commercial operation, but to also conduct social operations. Therefore, Islamic Banks plays an important role in developing the Indonesian economy. The aim of this study is to investigate the impact of internal and external factors that affect the profitability of Islamic Banks in Indonesia. Methodology/Technique-The methodology of this research is multiple regression. The object of this research is the Islamic banking industry in Indonesia. Internal factors include size, liquidity, asset quality, management, and efficiency ratio. External factors include interest rate and inflation. Return on Assets is used to measure profitability. The monthly data is collected from the financial reports of Islamic Banks between 2011 to 2016. Findings-The findings show that size, liquidity, assets quality, management ratio, interest rate and inflation lead to a greater Return on Assets (profitability) in Islamic Banks in Indonesia. Efficiency however does not have a significant effect on profitability of Islamic Banks in Indonesia. Novelty-Based on the results of this research, it can be concluded that the Islamic banking industry can use those variables to improve the profitability of Islamic banks in the future. In addition, there are two variables that affect the profitability of Islamic banking industry. For the Islamic banking industry should anticipate the movement of inflation and interest to improve the profitability of Islamic banks.
Determinants Profitability of Islamic Banks in Indonesia
2019
The aim of study is to analyse the determination of profitability of Islamic Banks in Indonesia. The sample used of all Islamic banks in Indonesia. Sampling method is purposive sampling and gotten 10 Islamic banks. Data analysed by using panel regression. The results of the research obtained that DER positively effect on ROA, while Operational Costs and Operating Income (BOPO) negatively influence to ROA. The variable NPF and CAR have no significant effect on Return on Assets (ROA) in Islamic
Determinants of Islamic Bank Profitability: Evidence from Indonesia
GATR Journal of Finance and Banking Review, 2020
Objective – Islamic Banks have a distinct advantage that is not only conduct a commercial operation, but to also conduct social operations. Therefore, Islamic Banks plays an important role in developing the Indonesian economy. The aim of this study is to investigate the impact of internal and external factors that affect the profitability of Islamic Banks in Indonesia. Methodology/Technique – The methodology of this research is multiple regression. The object of this research is the Islamic banking industry in Indonesia. Internal factors include size, liquidity, asset quality, management, and efficiency ratio. External factors include interest rate and inflation. Return on Assets is used to measure profitability. The monthly data is collected from the financial reports of Islamic Banks between 2011 to 2016. Findings – The findings show that size, liquidity, assets quality, management ratio, interest rate and inflation lead to a greater Return on Assets (profitability) in Islamic Ban...
Islamic Bank Profitability: A Study of Islamic Bank in Indonesia
2018
The aims of this paper are to examine the effect of factors that contribute towards the profitability of Islamic bank in Indonesia over the period 2008 – 2017. The research method used in this study is the explanatory method. We use secondary data obtained from the OJK to examine the effect of Bank Specific & Macroeconomic Determinants of Islamic Bank Profitability and then analyse the data using GMM techniques. The result of the study found that only Bank Size of Bank Specific determinant had a positive effect both ROA and ROE while Capital, credit risk and Liquidity had a negative effect on the profitability of Islamic banking in Indonesia. Finally, the macroeconomic determinant found only inflation had positive effect while GDP had no significant effect on Islamic bank profitability. The result indicates that Islamic bank in Indonesia need well developed and well supported by government through independent regulation out of the bank of Indonesia, this mean Islamic bank could deve...
2018
This study aims to analyze the impact of selected macroeconomics variables on Islamicbanks’ profitability in Indonesia which is proxied by Return on Assets (ROA). The selected variables of macroeconomic include inflation, Bank Indonesia’s(BI) rate (central bank’s rate), money supply, and exchange rate. This research used secondary monthly data from 2012-2015, and analyzed using multiple regression model. The research findings indicate that among four independent variables, there are three variables that significantly influence the performance of Islamic banks, namely BI’s rate, exchange rate, and money supply. BI’s rate and money supply have negative relationship with the performance of Islamic banks, while exchange rate show positive relationship with the performance of Islamic banking, Unfortunately, inflation does not significantly affect the performance of Islamic bank.
Determinants of Profitability Islamic Commercial Banks in Indonesia
2019
This research aims to find out the influence of internal factors (NPF, NYM,CAR) and external factors (Exchange Rate) toward Return on Asset of Islamic commercial banks in Indonesia during, 2010-2017. This study uses secondary data collected from various eligible sources with annual period and constructed as panel data. Total data panel observation 64 and 8 samples of Islamic Commercial Banks listed in the OJK used in this study. The result reveals that Non Performing Financing, and Exchange Rate have a significant negative influence towards Return on Assets as the dependent variable. While, Net Yield Margin has a significant positive influence towards Return on Assets. Lastly, Capital Adequacy Ratio has a negative insignificant influence towards Return on Assets.
Determinant of Islamic Banking Profitability in Indonesia
Jurnal Organisasi dan Manajemen, 2019
Finding a determinant of profitability has become one of the most popular topics in banking research. Previous research has identified many factors that significantly influence bank profitability. There are also many studies that measure the effectiveness of sharia banking globally, but few analyze the profitability issues of sharia banks. This study aims to analyze the impact of factors affecting profitability in Islamic Banks listed on the Indonesia Stock Exchange. The method used is multiple linear regression analysis. The variables are return on assets as dependent variable and murabahah, musyarakah, mudharabah, branch office, cash office, and Automatic Teller Machine as independent variable. This study found that funding factors such as murabaha, musharaka and conventional and electronic networking factors such as Branch Office, Cash Office, and ATM had positive and significant impact on profitablity of Sharia Bank, while mudharabah had a negative and significant influence on p...
Determinant of Indonesian Banking Profitability: Case Study Dual Banking System
2021
Islamic banking is considered as the perfect alternative of the current conventional financial system. However, there is still a huge amount of criticisms in terms of its practice, with many claims that Islamic banking and finance simply replaces conventional banking terminology and offers near-identical services to its clients but at a higher cost. The objective of this study is to make a comparative empirical assessment on the determinants of profitability between the Islamic and conventional banks in Indonesia. The panel data regression is applied to analyze the relationship between profitability indicators and both industry and country level characteristics. As far as the author knows, only few studies compare the profitability of Indonesian Islamic banks and conventional banks, especially in using econometrics approach. From the empirical result in the combined model, it is known that conventional banks are more profitable than Islamic banks. Compared to the combined regressio...
THE IMPACT OF MACROECONOMIC VARIABLES ON INDONESIA ISLAMIC BANKS PROFITABILITY ARTICLE HISTORY
Economic development of Indonesia has an important role in the growth of Islamic banking sector. It is clear that the Islamic banking sector in Indonesia needs a conducive economic situation to make a better performance. The objective of this study was to investigate the influence of macroeconomic variables on the profit of Islamic Banks in Indonesia. Macroeconomic variables used in this study were Gross Domestic Product (GDP), Inflation rate, and BI Rate (interest rate of the central Bank of Indonesia). In addition, Non Performing Financing (NPF) was included in this model to represent another determinant for banks in gaining profit. Econometric model by formulating a multiple regression model was used to estimate the impact of GDP, BI Rate, Inflation rate, and NPF on the profit of Islamic banks. The results of this study showed that partially, all explanatory variables (GDP and BI Rate, Inflation Rate and NPF) have a significant effect on the Profit of Islamic Banks.