Financial Performance Determinant of Islamic Banking in Indonesia

Hasan Mukhibad, Muhammad Khafid

Abstract


The rapid growth of Islamic banks also occured in Indonesia. The high growth of Islamic banks’ assets gave opportunities to increase bad debt (non-performing financing). We examined the impact of good corporate governance (GCG), number of sharia supervisory board (SSB), financing to deposit ratio (FDR), profit and loss sharing (PLS) financing ratio, profit sharing rate of financing, and temporary syirkah fund ratio on the performance of non-performance financing (NPF) and return on assets (ROA). This research also tested the influence of NPF on ROA. The population of this research was Islamic commercial banks in Indonesia with the observation ranged from 2009-2016. The samples were determined by using a purposive sampling method. Data analysis used a structural equation model with WarpPLS. We proved that empirically GCG disclosure did not affect NPF. NPF bank was influenced by PLS financing and temporary syirkah fund ratio. PLS financing income and FDR financing did not affect the NPF. Moreover, GCG, SSB, temporary syirkah fund, and NPF disclosures influenced profitability

JEL Classification: G31, G32, G34

DOI: https://doi.org/10.26905/jkdp.v22i3.2061


Keywords


Corporate Governance; Non-Performing Financing; Profit and Loss Sharing Financing; Risk Financing; Sharia Supervisory Board

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References


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DOI: https://doi.org/10.26905/jkdp.v22i3.2061

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Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

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