Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 866 Download : 459

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose – This study aims to analyse the effect of non performing financing (NPF), capital adequacy ratio (CAR), financing to deposit ratio (FDR), and Bank Indonesia shariah promissory notes (SBIS) on Islamic banks’ profitability (ROA) in Indonesia.
Methodology – The data set consists of 10 Islamic banks operating in Indonesia between 2017—2021. The secondary data was collected from the Financial Services Authority (Otoritas Jasa Keuangan, OJK). A method of panel data is used for this study by using Stata 17 to process the data.
Findings – The estimation results showed that NPF partially has a significant negative relationship on ROA, both CAR and SBIS have a significant effect on ROA, while FDR does not affect ROA. Simultaneously, NPF, CAR, and FDR do not affect ROA. But NPF, CAR, FDR, and SBIS simultaneously have a positive and significant effect on the Islamic Bank's profitability (ROA) by the year 2017 – 2021.
Implications – Islamic banks need to be more selective in providing financing to customers so that financing risks can be minimized. In addition, CAR and SBIS need to be increased or maintained so that the profitability level of Islamic banks can be maximized.
Originality – This research tries to re-examine the effect of financial performance on the profitability of Islamic banks in 2017-2021.

Keywords

CAR FDR NPF ROA

Article Details

License

Copyright (c) 2023 Lidia Sjarief, Muhammad Abdul Ghoni, Muchammad Taufiq Affandi

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
How to Cite
Sjarief, L., Abdul Ghoni, M., & Affandi, M. T. (2023). The role of financial performance on the profitability of Indonesian Islamic banks. Jurnal Ekonomi & Keuangan Islam, 9(2), 277–285. https://doi.org/10.20885/JEKI.vol9.iss2.art9
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX
Crossref
Scopus
Google Scholar
Europe PMC

References

  1. Ahmed, A.-H., & N’Dri, K. S. (2021). Determinants of banks profitability: Empirical evidence from Ghana’s commercial banking industry. International Journal of Economics and Financial Research, 7(74), 175–189. https://doi.org/10.32861/ijefr.74.175.189
  2. Al-Homaidi, E., Tabash, M. I., & Ahmad, A. (2020) The profitability of Islamic banks and voluntary disclosure: Empirical insights from Yemen, Cogent Economics & Finance, 8(1), 1-22. https://doi.org/10.1080/23322039.2020.1778406
  3. Alharbi, A.T. (2017), Determinants of Islamic banks’ profitability: international evidence, International Journal of Islamic and Middle Eastern Finance and Management, 10(3), 331-350. https://doi.org/10.1108/IMEFM-12-2015-0161
  4. Amrina, D. H., Faizah, I., & Supriyaningsih, O. (2021). Perbedaan rasio profitabilitas bank di Indonesia sebelum dan saat pandemi Covid-19. Al-Mashrof: Islamic Banking and Finance, 2(2), 96–104. http://ejournal.radenintan.ac.id/index.php/almashrof
  5. Anggraini, D., & Mawardi, I. (2020). Analisis faktor-faktor yang mempengaruhi profitabilitas bank umum Syariah di Indonesia. Jurnal Ekonomi Syariah Teori dan Terapan, 6(8), 1607. https://doi.org/10.20473/vol6iss20198pp1607-1619
  6. Anisa, S. T., & Anwar, S. (2021). Determinan profitabilitas bank umum syariah di Indonesia dengan tingkat likuiditas sebagai variabel intervening. JPS; Jurnal Perbankan Syariah, 2(2), 131–149. https://doi.org/10.46367/jps.v2i2.346
  7. Bhowmik, P. K., & Sarker, N. (2021). Loan growth and bank risk: Empirical evidence from SAARC countries. Heliyon, 7(5), e07036. https://doi.org/10.1016/j.heliyon.2021.e07036
  8. Derbali, A. (2021). Determinants of the performance of Moroccan banks. Journal of Business and Socio-Economic Development, 1(1), 102–117. https://doi.org/10.1108/jbsed-01-2021-0003
  9. Ekinci, R., & Poyraz, G. (2019). The effect of credit risk on financial performance of deposit banks in Turkey. Procedia Computer Science, 158, 979-987. https://doi.org/10.1016/j.procs.2019.09.139
  10. Handley-Schachler, M., Juleff, L., & Paton, C. (2007). Corporate governance in the financial services sector. Corporate Governance, 7(5), 623–634. https://doi.org/10.1108/14720700710827202
  11. Kawiryawan, N & Hapsari, M. I. (2015). Pengaruh tingkat return sertifikat bank Indonesia syariah (SBIS) terhadap penempatan pada SBIS dan ROA bank umum syariah di Indonesia. Jurnal Ekonomi Syariah Teori dan Terapan, 2(11), 881–895. https://doi.org/10.20473/vol2iss201511pp881-895
  12. Le, T. D., & Ngo, T. (2020). The determinants of bank profitability: A cross-country analysis. Central Bank Review, 20(2), 65–73. https://doi.org/10.1016/j.cbrev.2020.04.001
  13. Maghfiroh, L., Hajijah, N., Musthafa, Z., & Khasanah, U. (2021). Apakah profitabilitas bank syariah didorong oleh faktor internal? Is Islamic bank profitability driven by internal factors? Jurnal Ilmiah Manajemen dan Bisnis, 22(2), 279–290. https://doi.org/10.30596/10.30596/jimb.v22i2.7155.
  14. Mason-Jones, R. & Towill, D. R. (1995). Bank credit risk management. Managerial Finance, 21(1), 66–78.
  15. O’Connell, M. (2022). Bank-specific, industry-specific and macroeconomic determinants of bank profitability: evidence from the UK. Studies in Economics and Finance. https://doi.org/10.1108/SEF-10-2021-0413
  16. Ongore, V. O., & Kusa, G. B. (2013). Determinants of financial performance of commercial banks in Kenya. International Journal of Economics and Financial Issues, 3(1), 237–252. http://www.econjournals.com/index.php/ijefi/article/view/334
  17. Patra, B., & Padhi, P. (2022). Resilience of Indian banks: Macroeconomic stress test modeling for credit risk. Journal of Public Affairs, 22(1), 1–14. https://doi.org/10.1002/pa.2350
  18. Purnamasari, Y. (2019). Determinan profitabilitas bank umum di Indonesia (Studi kasus: Bank kategori Buku 4). Jurnal Dinamika Ekonomi Pembangunan, 2(1), 1. https://doi.org/10.14710/jdep.2.1.1-14
  19. Sudarsono, H. (2017). Analisis pengaruh kinerja keuangan terhadap profitabilitas bank Syariah di Indonesia. Economica: Jurnal Ekonomi Islam, 8(2), 175–203. https://doi.org/10.21580/economica.2017.8.2.1702
  20. Syahputri, A., Putra. H. S., Julyanthry. J., Sari. E.P., &, Putri, D. E,. (2022). Effect of current ratio and debt to asset ratio on return on asset moderated by firm size. International Journal of Economics, Business, and Accounting Research, 6(1), 1-14 https://jurnal.stie-aas.ac.id/index.php/IJEBAR
  21. Zarrouk, H., Ben Jedidia, K. & Moualhi, M. (2016), Is Islamic bank profitability driven by same forces as conventional banks? International Journal of Islamic and Middle Eastern Finance and Management, 9(1), 46-66. https://doi.org/10.1108/IMEFM-12-2014-0120