This paper aims to examine the internal and external determinants of sharia banks profitability in Indonesia over the period 2010-2017. The bank profitability is measured by return on assets (ROA) as a function of bank-internal and external determinants. Using balances data set and fixed effect model, the empirical results have found strong evidence that both internal and external factors have a strong influence on the profitability. The internal factors of the bank i.e., capital adequacy, credit risk, and asset size have a significant and negatif effect on bank profitability, while liquidity have a positive and significant impact on banks profitability. However, the external factors only inflation has a significant and positive effect, while GDP has a negatif and significant effect on banks profitability. This result suggest that banks can improve their profitability through increasing banks liquidity, reinforce their capital structure, reduce their assets sizes and credit risk, in addition banks should be anticipate the external factors, thus sharia banks will be more competitive than conventional banks.

No abstract

Indonesia is the largest Muslim population globally, but literacy of Islamic finance and banking is still limited, which impacts the development of sharia banking in Indonesia, including literature on Profitability and Stabil-ity in Islamic Banking. The aim of this study was to determine the profitability and stability of 34 Islamic banks in Indonesia for the period 2010-2017. This study analyzes the factors that affect Islamic banking's profitability and stability using panel data regression with fixed effect techniques. The results showed that Is-lamic banks' profitability is determined by capital, credit risk, operational efficiency, liquidity risk, asset size, stability, GDP, and inflation. The results showed that Islamic banks' profitability is determined by capital, credit risk, operational efficiency, liquidity risk, asset size, stability, GDP, and inflation. The results of Islamic banking stability found that profitability and credit risk impact bank stability, while the Asset Size, liquidity, Operating Effectiveness, inflation, and GDP do not affect the Islamic banks' stability. These findings are sig-nificant for the growth and development of Islamic banks in Indonesia

No abstract

No abstract