This paper investigates the impact of profit and loss sharing (PLS) contracts on non-performing financing of Islamic rural banks as Islamic small banks focus on small and medium enterprises at province level across country. Our study employs panel data, consisting of 142 Islamic rural banks and using quarterly data from 2013Q1 to 2018Q4, and splits them based on the bank's size and geographical area. Both static and dynamic panel regressions are then applied. The results obviously indicate that a high proportion of profit and loss sharing contracts leads to high financing risk. The large Islamic banks encounter a higher non-performing financing stemming from profit and loss contracts compared to small Islamic banks. Profit and loss contracts also produce higher financing risk for Islamic banks outside Java, as those areas are less developed areas than Java itself. A more efficient Islamic bank is less financing risk. Income diversification lessens the impaired financing and, more particularly, large Islamic banks and Islamic banks located in Java much benefit by diversifying income and financing to lower financing risk. Our study suggests that Islamic rural banks may consider the optimal level of profit and loss sharing contracts to minimize financing risk.
This study aims to analyze the relationship between macroeconomic factors and risk-taking behavior in a dual banking system. Adopting a panel cointegration approach, this research posits macroeconomic factors as exogenous variables and risk-taking behavior as endogenous variables. With having 468 quarterlyobservations consisting of 18 banks in Indonesia during 2010-Q4 to 2017-Q1, it finds that the risk-taking behavior of the banks has a long-term relationship with macroeconomic factors. Moreover, conventional bank has long-term relationship to macroeconomic nonetheless it results inversely to Islamic bank. In terms of bankspecified characteristics, bank size and equity to asset ratio are substantial factors for the banks' risk mitigation.
Islamic Rural Bank must deal with internal and external risks which will affect to the performance of the bank. This paper aims to assess the internal and external risks that influence to the bank performance. By adopting panel data analysis, the paper analyzes 21 biggest Islamic rural bank which as a representative of 21 provinces around Indonesia during 2013-2017 which result 420 observation period. Furthermore, Return on Asset (ROA) are utilized as dependent variable which represents Islamic rural bank’s performance. As independent variables, Non-Performing Financing (NPF) and Capital Adequacy Ratio (CAR) are applied as internal risk in Islamic rural bank. To analyze external risk, regional macroeconomic factors, Regional Economic Growth (REG) and Regional Inflation (RInf) are employed then Total Asset of Islamic rural bank (Size) is also used as complementary variable. Based on the analysis, this study finds that SRB has robust risk management through internal and external risk. However, REG has significant ROA that explains the performance of Islamic rural bank will depend on regional economic growth in each province.
This study aims to measure the performance of Sharia banking under Maqashid Shariah's point of view. Maqashid-sharia-based Performance Evaluation Model (MPEM) approach does not only shows the overall banking performance as usual, but also in the aspect of its Sharia compliance. The samples used in this study are 11 Islamic banks which is retrived from Central Bank of Indonesia that consist of Islamic Bank's annual report from 2011 to 2017. To measure the Islamic banks, this research adopts maqashid sharia measurement that consist of 5 (five) elements formulated in MPEM. According to the finding, Bank Muammalat Indonesia (BMI) outperforms in all aspects with an average value of 177,93. However, in detail each Islamic banks has its strength in different criteria. Eventhough in certain period Islamic banks suffered loss, this condition did not lead the bank to perform non sharia activity. AbstrakPenelitian ini bertujuan untuk mengukur kinerja pebankan syariah dengan sudut pandang Maqashid Shariah. Pendekatan Maqashid-sharia-based Performance Evaluation Model (MPEM) tidak hanya menunjukkan kinerja perbankan seperti pada umunya, tetapi dapat menampilkan aspek penerapan kesyariahan. Sampel yang digunakan dalam penelitian ini adalah 11 Bank Umum syariah yang terdaftar di Bank Indonesia. Data laporan keuangan tahunan bank dari tahun 2011 hingga 2017 dijadikan dasar pengukuran dalam penelitian ini. Dari 5 (lima) kiriteria maqashid syariah yang dirumuskan dalam MPEM ini, BMI mengungguli dari semua aspek dengan rata-rata nilai sebesar 177,93 tetapi jika dijabarkan masing-masing bank unggul pada kriteria yang berbeda. Meskipun di beberapa bank mengalami kerugian pada tahun-tahun tertentu atau penurunan profit, hal tersebut tidak menjadikan bank syariah keluar dari koridor syariah.
Fatwa holds a pivotal role in determining the guidance of Islamic society especially in Islamic finance ecosystem. Moreover, fatwa will render the direction for Islamic finance and then it will impact to the stakeholders of Islamic finance ecosystem such as regulator, Islamic finance institution, investor, and the market performance. This paper will discuss about the role of fatwa on the Islamic law transaction and its effect to Islamic finance performance. By adopting content analysis as the method of the study, this paper finds that firstly there has several fatwa having any dispute among the Islamic scholars and Islamic fatwa institution such as sukuk nature, bay al-inah, the nature of interest, bay al-dayn, and screening methodology adopted by several indices. Secondly, the different fatwa issued by Islamic scholars and Islamic fatwa institution influence the performance of Islamic finance product in the market which affect the stakeholders of Islamic finance industry.
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