Analisis Profitabilitas Bank Pembiayaan Rakyat Syariah di Indonesia: Apakah Kepemilikan Manajemen Berpengaruh?

Abstract

Islamic banking industry in Indonesia is experiencing the rapid growth, but research related to Islamic financial institutions in Indonesia is still limited. In analyzing profitability, management ownership has an important role because it can overcome the problem of agency conflict and reduce agency costs. Therefore, this study aims to examine the effect of management ownership on profitability of Islamic rural banks (BPRS) in Indonesia. To achieve this objective, this study analyzes quarterly panel data of financial report from 155 BPRS spread across 21 provinces in Indonesia during 2011-2016 with total 2,765 observations. Profitability, as dependent variable in this study, is measured by return on assets (ROA) and return on equity (ROE). Management ownership, as independent variable in this study, consists of the existence of board of director ownership and the existence of board of commissioner ownership. In addition, this study also uses bank size, deposit ratio, capital ratio, GDP growth rate, and inflation rate as control variables. The result shows that the existence of board of director ownership has negative and significant effect on ROA and ROE. However, the existence of board of commissioner ownership has no significant effect on all profitability variables. By examining the effect of management ownership on BPRS profitability, it is expected to fill the gap in literature of Islamic financial institutions in Indonesia, especially BPRS.

Do stability and size affect the profitability of Islamic rural bank in Indonesia?

“…Economic growth has no effect on the profitability of the BPRS. These results support the research of Fithria (2018) which finds that economic growth has no effect on profitability in BPRS. This condition occurred because the economic growth in the research period was relatively stable and even tended to stagnate so that it did not affect the amount of funding and financing of the BPRS.…”

“…This situation will increase the ability of producers to meet their financing obligations at banks (Sudarsono, 2017a). These results support the research of Aslam and Ijaz (2016), Chokri andAnis (2018), andFithria (2018) which find that inflation does not statistically affect bank profitability.…”

“…Research by Djalilov and Piesse (2016), Lee et al (2015), Sudarsono (2017b), Zarrouk et al (2016) found a negative relationship between inflation (INF) and profitability. While Aslam and Ijaz (2016), Chokri and Anis (2018), Fithria (2018), and Tumewang et al (2019) find that inflation does not statistically affect bank's profitability. The hypothesis of the relationship between the growth rate and the inflation rate on the profitability of a BPRS can be arranged as follows:…”

“…A number of studies have found a positive relationship between economic growth and profitability (Dietrich & Wanzenried, 2011;Sinha & Sharma, 2016;Trujillo-Ponce, 2013). However, Fithria (2018) shows that there is no effect between economic growth and the profitability of BPRS in Indonesia. Meanwhile, an increase in inflation will increase production costs, thereby reducing financing (Sudarsono, 2017a).…”

“…In line with Sijabat et al (2020) with a research object of 42 banks listed on the Indonesia Stock Exchange (IDX), found a negative relationship between size and profitability. Meanwhile, Fithria (2018) conducted research on 115 BPRS in Indonesia and found that the size of the BPRS has an effect on profitability.…”