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Abstract
Doubtful finance showing a bad performance of a company, but this can be avoided if the banks use the right strategy to prevent such financial condition. This study aims to indicate the determinants of doubtful finance in the Indonesian Islamic banking sector from 2011 to 2018. We employed panel data regression to meet our objectives. Our results depict that banks’ profitability and finance to deposit ratio have a significant positive impact on Non-Performing Finance. On the other hand, Gross Domestic Product has a significant positive effect on doubtful finance. This study provides an alluded picture of Indonesian Islamic banking sectors, particularly Non-Performing Finance (NPF). Moreover, it enables policymakers to deliberate on the macroeconomic determinants of NPFs (i.e. GDP). Furthermore, this study will enhance the Islamic bank's performance literature.
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References
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- Alandejani, M., & Asutay, M. (2017). Nonperforming loans in the GCC banking sectors: Does the Islamic finance matter? Research in International Business and Finance, 42(June 2016), 832–854. https://doi.org/10.1016/j.ribaf.2017.07.020
- Arif, A., & Nauman Anees, A. (2012). Liquidity risk and performance of banking system. Journal of Financial Regulation and Compliance, 20(2), 182–195. https://doi.org/10.1108/13581981211218342
- Astrini, K. S., Suwendra, I. W., & Suwarna, I. K. (2018). Pengaruh CAR, LDR, dan Bank Size terhadap NPL pada Lembaga Perbankan yang Terdaftar di Bursa Efek Indonesia. Bisma: Jurnal Manajemen, 4(1), 34–41. Retrieved from https://ejournal.undiksha.ac.id/index.php/BISMA-JM/article/view/21977/13607
- Berger, A. N., & DeYoung, R. (1997). Problem Loans and Cost Efficiency in Commercial Banks. Finance and Economics Discussion Series, 1997(08), 1–29. https://doi.org/10.17016/feds.1997.08
- Chaibi, H., & Ftiti, Z. (2015). Credit risk determinants: Evidence from a cross-country study. Research in International Business and Finance, 33, 1–16. https://doi.org/10.1016/j.ribaf.2014.06.001
- Chang, Y. T. (2006). Role of Non-Performing Loans (NPLs) and Capital Adequacy in Banking Structure and Competition (No. 06–15). Norwich.
- Dimitrios, A., Helen, L., & Mike, T. (2016). Determinants of non-performing loans: Evidence from Euro-area countries. Finance Research Letters, 18, 116–119. https://doi.org/10.1016/j.frl.2016.04.008
- Diyanti, A., & Widyarti, E. T. (2012). Analisis Pengaruh Faktor Internal dan Eksternal Terhadap Terjadinya Non-Performing Loan (Studi Kasus pada Bank Umum Konvensional yang Menyediakan Layanan Kredit Pemilikan Rumah Periode 2008-2011). Diponegoro Journal of Management, 1(2), 290–299.
- Ekananda, M. (2017). Macroeconomic Condition and Banking Industry Performance in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 20(1), 71–98. https://doi.org/https://doi.org/10.21098/bemp.v20i1.725
- Ghosh, M., Ghoshray, A., & Malki, I. (2013). Regional divergence and club convergence in India. Economic Modelling, 30(1). https://doi.org/10.1016/j.econmod.2012.10.008
- Gujarati, D., & Porter, D. C. (2009). Basic Econometrics (5th Editio). New York: McGraw-Hill Irwin.
- Havidz, S. A. H., & Setiawan, C. (2015). Bank Efficiency and Non-Performing Financing (NPF) in The Indonesian Islamic Banks. Asian Journal of Economic Modelling, 3(3), 61–79. https://doi.org/10.18488/journal.8/2015.3.3/8.3.61.79
- Indah, D., & Arief, P. (2016). Pengaruh Non Performing Loan (NPL) dan Capital Adequacy Ratio (CAR) Terhadap Profitabilitas. Management Analysis Journal, 5(2), 110–115.
- Kjosevski, J., & Petkovski, M. (2017). Non-performing loans in Baltic States: Determinants and macroeconomic effects. Baltic Journal of Economics, 17(1), 25–44. https://doi.org/10.1080/1406099X.2016.1246234
- Lidyah, R. (2016). Dampak Inflasi , BI RATE , Capital Adequacy Ratio (CAR), Biaya Operasional Pendapatan Operasional (BOPO) Terhadap Non Performing Financing (NPF) pada Bank Umum Syariah di Indonesia. I-Finance, 2(1), 1–19. Retrieved from http://jurnal.radenfatah.ac.id/index.php/I-Finance/article/view/1006/840
- Misra, B., & Dhal, S. (2010). Pro-cyclical management of non-performing loan by the Indian Public Sector Bank. BIS Asian Research Paper. Retrieved from http://www.bis.org/repofficepubl/arpresearch201003.08.pdf
- Nugrohowati, R. N. I., & Bimo, S. (2019). Analisis pengaruh faktor internal bank dan eksternal terhadap Non-Performing Financing (NPF) pada Bank Perkreditan Rakyat Syariah di Indonesia. Jurnal Ekononomi & Keuangan Islam, 5(1), 42–49. https://doi.org/10.20885/JEKI.vol5.iss1.art6
- OJK. (2019). Statistik Perbankan Syariah. Retrieved from https://www.ojk.go.id/id/kanal/syariah/data-dan-statistik/statistik-perbankan-syariah/Documents/Pages/Statistik-Perbankan-Syariah-Januari-2019/SPSJanuari 2019.pdf
- Popita, M. S. A. (2013). Analisis Penyebab Terjadinya Non Performing Financing Pada Bank Umum Syariah Di Indonesia. Accounting Analysis Journal, 2(4), 404–412. https://doi.org/https://doi.org/10.15294/aaj.v2i4.2884
- Solihatun. (2014). Analisis Non Performing Financing (NPF) Bank Umum Syariah di Indonesia Tahun 2007–2012. Jurnal Ekonomi Pembangunan, 12(1), 57–68. https://doi.org/https://doi.org/10.22219/jep.v12i1.3655
- Sudarsono, H. (2009). Dampak Krisis Keuangan Global terhadap Perbankan di Indonesia: Perbandingan antara Bank Konvensional dan Bank Syariah. La_Riba Journal Ekonomi Islam, III(1), 12–23. https://doi.org/10.20885/lariba.vol3.iss1.art2
- Sudarsono, H. (2017). Analisis Pengaruh Kinerja Keuangan terhadap Profitabilitas Bank Syariah di Indonesia. Economica: Jurnal Ekonomi Islam, 8(2), 175–203. http://dx.doi.org/10.21580/economica.2017.8.2.1702
References
Akbar, D. A. (2016). Inflasi, Gross Domestic Product (GDP), Capital Adequacy Ratio (CAR), dan Finance to Deposit Ratio (FDR) Terhadap Non Performing Financing (NPF) pada Bank Umum Syariah di Indonesia. I-Economic, 2(2), 19–37. Retrieved from http://jurnal.radenfatah.ac.id/index.php/ieconomics/article/view/1021/855
Alandejani, M., & Asutay, M. (2017). Nonperforming loans in the GCC banking sectors: Does the Islamic finance matter? Research in International Business and Finance, 42(June 2016), 832–854. https://doi.org/10.1016/j.ribaf.2017.07.020
Arif, A., & Nauman Anees, A. (2012). Liquidity risk and performance of banking system. Journal of Financial Regulation and Compliance, 20(2), 182–195. https://doi.org/10.1108/13581981211218342
Astrini, K. S., Suwendra, I. W., & Suwarna, I. K. (2018). Pengaruh CAR, LDR, dan Bank Size terhadap NPL pada Lembaga Perbankan yang Terdaftar di Bursa Efek Indonesia. Bisma: Jurnal Manajemen, 4(1), 34–41. Retrieved from https://ejournal.undiksha.ac.id/index.php/BISMA-JM/article/view/21977/13607
Berger, A. N., & DeYoung, R. (1997). Problem Loans and Cost Efficiency in Commercial Banks. Finance and Economics Discussion Series, 1997(08), 1–29. https://doi.org/10.17016/feds.1997.08
Chaibi, H., & Ftiti, Z. (2015). Credit risk determinants: Evidence from a cross-country study. Research in International Business and Finance, 33, 1–16. https://doi.org/10.1016/j.ribaf.2014.06.001
Chang, Y. T. (2006). Role of Non-Performing Loans (NPLs) and Capital Adequacy in Banking Structure and Competition (No. 06–15). Norwich.
Dimitrios, A., Helen, L., & Mike, T. (2016). Determinants of non-performing loans: Evidence from Euro-area countries. Finance Research Letters, 18, 116–119. https://doi.org/10.1016/j.frl.2016.04.008
Diyanti, A., & Widyarti, E. T. (2012). Analisis Pengaruh Faktor Internal dan Eksternal Terhadap Terjadinya Non-Performing Loan (Studi Kasus pada Bank Umum Konvensional yang Menyediakan Layanan Kredit Pemilikan Rumah Periode 2008-2011). Diponegoro Journal of Management, 1(2), 290–299.
Ekananda, M. (2017). Macroeconomic Condition and Banking Industry Performance in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 20(1), 71–98. https://doi.org/https://doi.org/10.21098/bemp.v20i1.725
Ghosh, M., Ghoshray, A., & Malki, I. (2013). Regional divergence and club convergence in India. Economic Modelling, 30(1). https://doi.org/10.1016/j.econmod.2012.10.008
Gujarati, D., & Porter, D. C. (2009). Basic Econometrics (5th Editio). New York: McGraw-Hill Irwin.
Havidz, S. A. H., & Setiawan, C. (2015). Bank Efficiency and Non-Performing Financing (NPF) in The Indonesian Islamic Banks. Asian Journal of Economic Modelling, 3(3), 61–79. https://doi.org/10.18488/journal.8/2015.3.3/8.3.61.79
Indah, D., & Arief, P. (2016). Pengaruh Non Performing Loan (NPL) dan Capital Adequacy Ratio (CAR) Terhadap Profitabilitas. Management Analysis Journal, 5(2), 110–115.
Kjosevski, J., & Petkovski, M. (2017). Non-performing loans in Baltic States: Determinants and macroeconomic effects. Baltic Journal of Economics, 17(1), 25–44. https://doi.org/10.1080/1406099X.2016.1246234
Lidyah, R. (2016). Dampak Inflasi , BI RATE , Capital Adequacy Ratio (CAR), Biaya Operasional Pendapatan Operasional (BOPO) Terhadap Non Performing Financing (NPF) pada Bank Umum Syariah di Indonesia. I-Finance, 2(1), 1–19. Retrieved from http://jurnal.radenfatah.ac.id/index.php/I-Finance/article/view/1006/840
Misra, B., & Dhal, S. (2010). Pro-cyclical management of non-performing loan by the Indian Public Sector Bank. BIS Asian Research Paper. Retrieved from http://www.bis.org/repofficepubl/arpresearch201003.08.pdf
Nugrohowati, R. N. I., & Bimo, S. (2019). Analisis pengaruh faktor internal bank dan eksternal terhadap Non-Performing Financing (NPF) pada Bank Perkreditan Rakyat Syariah di Indonesia. Jurnal Ekononomi & Keuangan Islam, 5(1), 42–49. https://doi.org/10.20885/JEKI.vol5.iss1.art6
OJK. (2019). Statistik Perbankan Syariah. Retrieved from https://www.ojk.go.id/id/kanal/syariah/data-dan-statistik/statistik-perbankan-syariah/Documents/Pages/Statistik-Perbankan-Syariah-Januari-2019/SPSJanuari 2019.pdf
Popita, M. S. A. (2013). Analisis Penyebab Terjadinya Non Performing Financing Pada Bank Umum Syariah Di Indonesia. Accounting Analysis Journal, 2(4), 404–412. https://doi.org/https://doi.org/10.15294/aaj.v2i4.2884
Solihatun. (2014). Analisis Non Performing Financing (NPF) Bank Umum Syariah di Indonesia Tahun 2007–2012. Jurnal Ekonomi Pembangunan, 12(1), 57–68. https://doi.org/https://doi.org/10.22219/jep.v12i1.3655
Sudarsono, H. (2009). Dampak Krisis Keuangan Global terhadap Perbankan di Indonesia: Perbandingan antara Bank Konvensional dan Bank Syariah. La_Riba Journal Ekonomi Islam, III(1), 12–23. https://doi.org/10.20885/lariba.vol3.iss1.art2
Sudarsono, H. (2017). Analisis Pengaruh Kinerja Keuangan terhadap Profitabilitas Bank Syariah di Indonesia. Economica: Jurnal Ekonomi Islam, 8(2), 175–203. http://dx.doi.org/10.21580/economica.2017.8.2.1702