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An analysis on the factors affecting profitability level of Sharia banking in Indonesia

Authors :
Herni Ali
Muhammad Said
Source :
Banks and Bank Systems, Vol 11, Iss 3, Pp 28-36 (2016)
Publication Year :
2016
Publisher :
LLC CPC Business Perspectives, 2016.

Abstract

The purpose of this research is to analyze the influence of Capital Adequacy Ratio (CAR) Third Party Funds (TPF), Non Performing Financing (NPF), Financing to Deposit Ratio (FDR), Operation Cost Operating Income (OCOI), Net Operating Margin (NOM), Gross Domestic Product (GDP), inflation and Return on Asset (ROA) as a proxy of Islamic bank’s profitability in Indonesia during 2011-2014 periods. The population of study was Sharia banking (BS) in Indonesia. Time series data from Indonesian Banking Statistics 2011-2014 were used as the primary data. Multiple linear regression was applied as method of analysis. The result shows that CAR, NPF, FDR and NOM did not affect profitability, while TPF, OCOI had negative effect on profitability. Meanwhile, GDP and inflation variable had significant effect with positive direction. Keywords: Sharia bank, ROA, TPF, NPF and inflation. JEL Classification: G21, E31

Details

ISSN :
19917074 and 18167403
Volume :
11
Database :
OpenAIRE
Journal :
Banks and Bank Systems
Accession number :
edsair.doi.dedup.....9534b65cf68c2508401a9bf72a5f077d
Full Text :
https://doi.org/10.21511/bbs.11(3).2016.03