Determinant of Indonesian Islamic and Conventional Banks’ Profitability

Syathiri, Ahmad; Anshori, Muslich; Sukmana, Raditya

doi:10.7232/iems.2020.19.3.538

Cited by 3 publications

(3 citation statements)

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“…They also discovered that real interest rates had a negative impact on profitability, but inflation, size, and capital sufficiency all have a favorable impact. Hasanov et al ( 2009 ) and Syathiri et al ( 2020 ) discovered that the size of a bank, the number of loans it makes, and the amount of money it lends out are all factors. Bank profitability is impacted by the adequacy of financial assets, the deposit-to-GDP level, and the operating efficiency, according to Brahmaiah ( 2018 ).…”

Section: Literature Reviewmentioning

confidence: 99%

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

et al. 2022

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Aim of the articleThe main purpose of this article was to investigate the impact of the determinants of profitability on the commercial banks in Asian countries. An Asian country like Bangladesh and India was selected as the research field. The present study also pursues to examine the impact of specific factors and macroeconomic factors on the profitability in the Bangladeshi and Indian private commercial banking sectors.Methods applied and analysis toolsThe data were retrieved from the Annual Reports of Indian and Bangladeshi private commercial banks covering the period of 2010–2021. As sample, 40 private commercial banks were considered randomly, of which 20 were from India and 20 were from Bangladesh. The panel data research methodology was used as an estimation technique to analyze the data. Also, the ordinary least squares (OLS) regression model was used to scrutinize data. To check whether the models were appropriate, the Breusch–Pagan Lagrange Multiplier (LM) Test was employed. Banks' specific factors and microeconomic factors showed almost the same variations for both Bangladesh's and India's private banks. All models and tests were evaluated using E-views econometric software.The major findingsThe present study finds that the Return on Asset (ROA) from the banks' specific variables, strength of the Bank size (BS), and Debt to Asset Ratio (DAR) are found to be positive and significant. For banks, the Deposit to Asset Ratio (DTAR) and the Loan to Deposit Ratio (LDR) are found to be negative and significant. The Equity to Asset Ratio (EAR) and Debt to Equity Ratio (DER) do not have any positive/negative impact.Contribution, originality, and implicationsAs macroeconomic variables, the inflation rate (IR) and the GDP growth rate (GDPGR) are measured and found to be positive and significant for ROA. As macroeconomic variables, the Inflation Rate (IR) and the GDP Growth Rate (GDPGR) are found to be positive and significant in the case of ROA. The concerned authorities responsible for regulating the financial performance of the banking sector can use the results of this study to take various fruitful decisions on bank profitability.

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Section: Literature Reviewmentioning

confidence: 99%

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

et al. 2022

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“…The ROA ratio is a comparison between the net income generated by the bank and the total assets held by that bank (Ledhem, 2022). The higher the ROA value, the more effectively the bank manages its assets to generate income (Syathiri et al, 2020). Typically, a bank's ROA ratio is considered well when it exceeds 1% (Abou Elseoud et al, 2020).…”

Section: Return On Assetsmentioning

confidence: 99%

The Impact Of Financing Product Scheme To Islamic Banking Financial Performance

Mahdi,

Aprilianto

2023

JIEI

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The aim of this study is to determine how different financing plans affect a bank's ability to earn income and manage financing risk throughout the course of both the short- and long-terms. The study utilizes an associative research design and a quantitative methodology. The Financial Services Authority's monthly aggregate reports on Islamic banking for the years 2012 to 2022 make up the study sample. Total debt-based financing, total profit-sharing financing, total leasing-based financing, return on assets (ROA), and non-performing finance (NPF) are among the variables included in the study model. Vector Error Correction Modelling (VECM), which enables the study of the data, is used to examine the short- and long-term effects of independent factors on the dependent variable. Two investigational models—the ROA model and the NPF model—are included in the study. According to the research's findings, when viewed from the NPF model's point of view, debt- and leasing-based financing are more secure over the long run for Islamic banks. Leasing-based financing, however, turns out to be more beneficial for Islamic banks from the standpoint of the ROA model

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“…They discovered that profitability was positively impacted by state ownership, loan size, inflation rate, and operational performance. In this connection, the Uralov (2020) examined the factors affecting bank profitability in the Central European nations between 1996 and 2017 and initiate that GDP had a favorable impact upon the bank desired profitability Syathiri et al (2020). asserted that banks size, the number of loans it produces, and quantity of money it lends out are all key factors determining banks' profitability.…”

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confidence: 99%

What Factors Drive the Microfinance Banks’ Profitability in Nigeria?

Ademola

2023

GUJR

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Banks’ profitability is vital component of economic growth, its significance extends from’ sustainability of banks to macroeconomic stabilization. Thus, this study assessed the effect of banks’ specific factors and macroeconomic variables on the profitability of microfinance banks (MFBs) in Nigeria from 2012-2021. The purposive sampling technique was employed to select 15 licensed MFBs from the South West region of Nigeria. This study employed return on assets (ROA) as an indicator of profitability. Secondary data was elicited from annual published reports of the selected MFBs. Descriptive, regression and correlation techniques were used to analyse data. Findings revealed that MFBs age and size play major roles in the determination of the banks’ profitability; non-performing loans substantially influenced MFBs profitability though adversely. Liquidity rate exerted negligible but positive influence on MFBs profitability. Furthermore, gross domestic product and exchange rate influenced MFBs profitability considerably. In contrast, the Inflation and Interest rate had an adverse but noticeable effect on banks’ profitability. The results provide signifncant directions to banks as well as related policy-makers. Bank management should take cognizance of these salient factors and endeavor to the lower non-performing loans in order to enhance MFBs profitability.

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Determinant of Indonesian Islamic and Conventional Banks’ Profitability

Cited by 3 publications

References 0 publications

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

The Impact Of Financing Product Scheme To Islamic Banking Financial Performance

What Factors Drive the Microfinance Banks’ Profitability in Nigeria?

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