The Determinant of Credit Risk in Indonesian Islamic Commercial Banks (original) (raw)
Related papers
2015
This paper examines the credit risk in Islamic Banks compared to Conventional Banks in Indonesia. The credit risks level in each Islamic banks and Conventional Banks are expressed in terms of financial ratios, Non-Performing Financing (NPF) in Islamic Banks and Non-Performing Loan (NPL) in Conventional Banks. The data sample used in this study are published financial statements for period of 2004-2013. To test the hypotheses the authors classified the data into three categories based on the size of total assets, category 1 for total assets range of 1-10 trillion Rupiah, category 2 for total assets range of 10-50 trillion Rupiah and category 3 for range of total asstes of 50-100 trillion Rupiah. The authors find significant differences of NPF and NPL value in every categories. Remarkably only in category 1 that NPF outperform NPL, it indicates that the credit risk in Islamic Banks are lower than in Conventional Banks. Meanwhile for category 2 and category 3 the value of NPF are highe...
Credit Risk in Indonesia: Islamic Bank vs Conventional Bank
Fokus Manajerial, 2015
This paper examines the credit risk in Islamic Banks compared to Conventional Banks in Indonesia. The credit risks level in each Islamic banks and Conventional Banks are expressed in terms of financial ratios, Non-Performing Financing (NPF) in Islamic Banks and Non-Performing Loan (NPL) in Conventional Banks. The data sample used in this study are published financial statements for period of 2004-2013. To test the hypotheses the authors classified the data into three categories based on the size of total assets, category 1 for total assets range of 1-10 trillion Rupiah, category 2 for total assets range of 10-50 trillion Rupiah and category 3 for range of total asstes of 50-100 trillion Rupiah. The authors find significant differences of NPF and NPL value in every categories. Remarkably only in category 1 that NPF outperform NPL, it indicates that the credit risk in Islamic Banks are lower than in Conventional Banks. Meanwhile for category 2 and category 3 the value of NPF are higher than NPL, it indicates that the credit risk in Islamic banks are higher than in conventional banks. The rise of credit risk in Islamic banks in category 2 and category 3 due to greater total assets managed which are significantly will expose Islamic banks to greater credit risks.
The Effect of Financing on Credit Risk: Empirically on Indonesian Islamic Banking
EkBis: Jurnal Ekonomi dan Bisnis, 2021
Islamic banking has an important role in the economy, especially in moving the real sector. Islamic banking provides funding to the public in the form of financing. The financing provided cannot be separated from various risks that can threaten the health of the bank, one of which is financing risk. For that, the purpose of this study is to analyze the effect of financing on financing risk in Islamic banks for the period 2015 to 2020. The method used in this study is quantitative with multiple linear regression analysis techniques. This study uses time-series data and the variables in this study are mudharabah, musyarakah, murabahah, ijarah financing, and total assets as independent variables and NPF as a dependent variable. The results of the study concluded that total assets had a negative and significant effect on NPF and murabahah financing had a positive and significant effect on NPF. Meanwhile, mudharabah, musyarakah, and ijarah financing has no significant effect on NPF.
CERN European Organization for Nuclear Research - Zenodo, 2022
This study was conducted to examine the effect of the Financing Scheme in Islamic Commercial Banks which includes Murabahah, Mudharabah, Musyarakah, and Ijarah financing on Financing Risk or known as Non Performing Loans (NPL) in conventional banks and Non Performing Funding (NPF) in Islamic banks. The variables used in this study are the independent variables consisting of Murabahah, Mudharabah, Musyarakah, and Ijarah, and the dependent variable is the Risk of Financing or Non Performing Financing (NPF). The object used in the study is Islamic Commercial Banks registered with the OJK during the 2016-2020 period. This research is quantitative research of causality with multiple linear regression analysis method. The sample used is Islamic Commercial Banks (BUS) registered with the OJK during the study period. The results of the analysis (1) Murabahah has a positive effect on NPF; (2) Mudharabah has a negative effect on NPF; (3) Musyarakah has a negative effect on NPF; (4) Ijarah has a negative effect on NPF.
Factors Affecting Credit Risk in Indonesian Islamic Banks
Journal of Islamic Finance, 2016
This study uses dynamic panel data methods to examine the factors affecting credit risk in Indonesian Islamic banks. The panel data is collected from 11 full-fledged Islamic banks and 22 Islamic business units (windows) in conventional banks from 2004-2012, taking into account both macroeconomic variables and bank-specific variables. The Generalized Method of Moments (GMM), as proposed by Arellano and Bond (1991), is utilized to estimate the model. The results show that the GDP growth rate and the unemployment rate with a one-year lag have a strong effect on the level of the non-performing financing. Moreover, bank-specific variables such as bank's diversification and financing structure have a positive effect on the problem financing although its direction is not as expected. It is hoped that the findings could draw attention to factors affecting credit risk in Islamic banks so that credit risk can be properly managed.
Determinants of credit risk of Indonesian Sharīʿah rural banks
ISRA International Journal of Islamic Finance
PurposeThis study aims to examine the influence of internal and external factors on the credit risk (represented by nonperforming financing [NPF]) of Indonesian Sharīʿah rural banks (SRBs) – a type of Islamic bank that provides Islamic financial services especially to small and medium businesses in Indonesia. Internal variables comprise capital adequacy ratio (CAR), financing to deposit ratio (FDR), return on assets (ROA), operating expense ratio (OER), financing to value (FTV) and profit and loss sharing (PLS) financing ratio. External variables comprise inflation, economic growth and interest rate.Design/methodology/approachThe study uses the annual reports of SRBs in Indonesia as secondary data for the years 2010–2019. Auto regressive distributed lag (ARDL) is used as the analysis method to examine the short-run and long-run relationships between the variables.FindingsThe findings indicate that four variables experienced a lag in the short run, namely, NPF, inflation, CAR and PLS...
Risk Analysis of Islamic Banking Financing Business in Indonesia 2014-2018
Jurnal Ilmiah Al-Syir'ah, 2019
The purpose of this article is to analyze business risk in Islamic banking financing in Indonesia. The method used in this study is a qualitative research method with a descriptive approach. The data used in this study are secondary data sourced from Sharia Banking Statistics (SBS). The conclusions of this article are ten business risks that must be managed by Islamic banks in carrying out their functions, namely financing risk, market risk, liquidity risk, operational risk, legal risk, reputation risk, strategic risk, compliance risk, yield risk, yield risk, and investment risk. Four business risks affect the profitability of Sharia Commercial Banks (BUS) in Indonesia, namely financing risk as measured by NPF, the rupiah exchange rate measures market risk against the USD and inflation, return NCD measures risk on total deposits and investment risk measured by the percentage potential loss profit-sharing financing for mudharabah and musyarakah investment portfolios.
Default Risk on Islamic Banking in Indonesia
Stability of financial institutions is a crucial issue amid the economic crisis that hit the US and Europe. Islamic banking in Indonesia as financial institutions are also required to have good stability in order to maintain the stability of the national economy. The aim of this research is to determine the stability of Islamic banking in Indonesia, and understand the factors that affect the stability. Stability of Islamic banking will be measured using Merton model to estimate the Probability Default (PD). Panel data regression was used to estimate the factors that affect the stability of Islamic Banking. The object of this research is 10 Islamic banking in Indonesia that meet the specified criteria. From the analysis of the Merton model, the research found that the stability of Islamic banking in Indonesia is not good enough. This can be seen from the value of the probability default on Islamic banking which still above 0.5. However, based on the trend, the probability default of ...
The Determinants of Islamic Banking Capital Structure in Indonesia
Al-Tijary
This study aims to analyze and explain the factors that influence capital structure. Capital structure (CS) is measured by Debt to Equity Ratio (DER). Profitability is determined by Return on Assets (ROA) and Net Profit Margin (NPM). Loan to Deposit Ratio (LDR) is used as an indicator of risThis study aims to analyze and explain the factors that influence capital structure. Capital structure (CS) is measured by the Debt to Equity Ratio (DER). Profitability is determined by Return on Assets (ROA) and Net Profit Margin (NPM). Financial to Deposit Ratio (FDR) is used as an indicator of risk. Firm size is projected with Ln TA. The population of this study is all Islamic banks contained in Bank Indonesia, with observation periods starting in 2010 until 2018. The selection of samples in this study is a purposive sampling method. Data analysis and hypothesis testing were carried out by using the Eviews 11 program. The results of the study showed that sharia banking companies, all the indep...
Etikonomi, 2020
This study is essential because Islamic banks have a higher NPF level than conventional banks and examine whether macroeconomic indicators (macro-risk), internal factors of banking (GCG-earnings-capital) risk profile correlate term Indonesian Islamic banking. The method used is the correlation analysis involving four macro-risk variables (Forex; BI rate; Inflation and GDP), three GEC variables (GCG; ROA, and CAR), and two risk profiles (FDR and NPF). The number of samples is the ten largest Indonesia sharia commercial banks with the 2011-2018 periods. This research finds that macroeconomic indicators positively correlate to non-performing financing (NPF). The GEC positively correlates to NPF and FDR; GEC is negatively correlated to macro-risk indicators. However, some indicators are negatively correlated, such as GDP-corporate governance, Forex-profitability, GDP-efficiency, BI rate-capital, and profitability-NPF. The study proposed managerial implications to understand the relationship between macroeconomic, internal factors, and risk profile in Islamic bank lending. Abstrak. Latar belakang penelitian adalah adanya fenomena tingkat NPF bank syariah relatif lebih tinggi dari bank konvensional. Studi ini meneliti apakah indikator makroekonomi (risiko makro), profil risiko dan faktor kesehatan perbankan (GCG-pendapatan-modal yang dikenal sebagai GEC) memiliki korelasi dalam perbankan syariah Indonesia. Metode penelitian yang digunakan adalah analisis korelasi yang melibatkan empat variabel risiko makro (Valas; BI rate; Inflasi dan PDB), tiga variabel indicator kesehatan bank (GCG; ROA, dan CAR) dan profil risiko yaitu FDR dan NPF. Sampel berjumlah sepuluh bank umum syariah terbesar di Indonesia dengan periode 2011-2018. Kami menemukan bukti yang konsisten bahwa indikator ekonomi makro berkorelasi positif dengan pembiayaan bermasalah, RGEC berkorelasi positif dengan pembiayaan bermasalah dan RGEC berkorelasi negatif dengan indikator risiko makro. Namun, beberapa indikator berkorelasi negatif seperti GDP-corporate governance, Forex-profitability, GDP-efficiency, BI rate-capital dan profitability-NPF. Implikasi managerial studi ini adalah memahami korelasi antara makroekonomi, faktor-faktor internal dan profil risiko dalam pembiayaan bank syariah. Kata Kunci: bank syariah, makroekonomi, kesehatan bank, pembiayaan bermasalah