The impact of bank-specific and macroeconomic variables on profitability of Islamic rural bank in Indonesia

Sanusi, Muhammad

doi:10.29040/jiei.v5i3.635

Cited by 6 publications

(13 citation statements)

References 9 publications

(17 reference statements)

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“…The effect is relatively small but is a significant variable effect and deserves attention to increase the profits of Islamic banks. This study is in line with the research results of Adelopo et al (2018), Sanusi &Zulaikha (2019), and. Increased costs will reduce bank profits in pre-crisis conditions, during the crisis, and after the financial crisis.…”

Section: Discussionsupporting

confidence: 89%

“…The increase in non-performing financing illustrates the increasing risks and costs that banks must bear, thus impacting the decrease in Islamic bank profits. This study is in line with the results of studies from Amzal (2016), Sanusi andZulaikha (2019), and. Increased bank risk indicated by the increasing value of non-performing financing (NPF) will reduce bank revenues and impact profit reduction for Islamic banks.…”

Section: Discussionsupporting

confidence: 88%

“…The effect is small, but CAR is one of the variables that significantly impact the profits of Islamic banks. This study is in line with the research results of Sanusi & Zulaikha (2019). CAR's increase that illustrates the bank's internal efforts to increase financing capacity and anticipate the occurrence of problematic financing impacts the long-term decline in Islamic bank profits.…”

Section: Discussionsupporting

confidence: 88%

“…Macro-economic variables (Inflation) have no significant effect on profitability. The profitability of Islamic BPR is more influenced by internal bank variables than by macroeconomic variables (Sanusi & Zulaikha, 2019). Increased costs represent an increase in managed productive assets and provide opportunities to increase profits for banks.…”

Section: Financial Performance (Profit)mentioning

confidence: 99%

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The Impact of Financing Risk on Islamic Banking Performance in Indonesia

Setiawan

2021

SJEKI

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The financing risk is a significant issue in the Islamic banking industry that affects its performance. This research aims to examine the factors that influence financing risk on the financial performance of Islamic banking in Indonesia. This study utilized time-series data quarterly from 2009-2020 collected from three types of Islamic banking in Indonesia: Islamic Commercial Bank (ICB), Islamic Business Unit (IBU), and Islamic Rural Bank (IRB). It was analyzed using multiple regression estimation techniques with the Ordinary Least Square (OLS) method. This study revealed that the Islamic banks’ financing risk is significantly influenced by bank capital, financing, economic growth, inflation, and central bank’ rate (BI rates), both negatively and positively. In detail, the increase of bank capital, financing, and economic growth will reduce the financing risks, whilst inflation and BI rate increase the financing risks. The findings also disclosed that Islamic banks' financial performance is influenced by bank capital, operating costs, financing risks, inflation, and BI rates. Thus, the decrease in bank capital, operational costs, and financing risks will subsequently decrease the financial performance, while the increase of inflation and BI rates will increase the financial performance of Islamic banks. Economic growth is the most influential factor in reducing financing risk, while financing risk is the most significant factor in improving banks’ financial performance. The government's efforts to boost economic growth are crucial to reducing financing risks and improving the financial performance of Islamic banks.==========================================================================================================ABSTRAK – Dampak Risiko Pembiayaan terhadap Kinerja Bank Syariah di Indonesia. Risiko pembiayaan merupakan persoalan utama bagi industri perbankan termasuk perbankan syariah. Tujuan dari penelitian ini adalah untuk menganalisis faktor-faktor yang mempengaruhi risiko pembiayaan dan pengaruhnya terhadap kinerja keuangan perbankan syariah di Indonesia. Objek penelitian meliputi Bank Umum Syariah, Unit Usaha Syariah dan Bank Perkreditan Rakyat syariah. Model analisis menggunakan teknik estimasi regresi berganda dengan menggunakan metode Ordinary Least Square (OLS). Penelitian ini menggunakan data time-series periode kuartalan dari 2009-2020. Hasil penelitian ini menunjukkan bahwa risiko pembiayaan bank syariah dipengaruhi oleh modal bank, pembiayaan, pertumbuhan ekonomi, inflasi dan BI Rate. Hasil ini mengindikasikan bahwa peningkatan modal bank, pembiayaan, dan pertumbuhan ekonomi akan mengakibatkan penurunan risiko pembiayaan, sementara peningkatan inflasi dan BI Rate akan meningkatkan risiko pembiayaan. Selain itu, hasil kajian juga mendapati bahwa kinerja keuangan bank syariah dipengaruhi oleh modal bank, biaya operasional bank, risiko pembiayaan, inflasi dan BI Rate. Secara detil, penurunan modal bank, biaya operasional dan risiko pembiayaan akan meningkatkan kinerja keuangan bank syariah, sementara peningkatan inflasi dan BI Rate akan meningkatkan kinerja keuangan. Faktor yang berpengaruh paling terhadap penurunan risiko pembiayaan adalah pertumbuhan ekonomi. Penurunan risiko pembiayaan merupakan faktor yang berpengaruh paling besar terhadap peningkatan kinerja keuangan perbankan syariah. Upaya pemerintah untuk mendorong pertumbuhan ekonomi merupakan langkah yang sangat strategis mengurangi risiko pembiayaan dan meningkatkan kinerja keuangan perbankan syariah di Indonesia.

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Section: Discussionsupporting

confidence: 89%

Section: Discussionsupporting

confidence: 88%

Section: Discussionsupporting

confidence: 88%

Section: Financial Performance (Profit)mentioning

confidence: 99%

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The Impact of Financing Risk on Islamic Banking Performance in Indonesia

Setiawan

2021

SJEKI

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“…Fakhrunnas & Imron (2019) documented a negative influence of NPF on 21 rural Islamic banks' performance across 21 in Indonesia during the 2013-2017 periods. Similarly, Sanusi & Zulaikha (2019) found evidence that NPF negatively affected Islamic rural banks' profitability in Indonesia. Finally, Zaman & Chowdhury (2019) also found a negative correlation between NPF and Islamic banking performance in Bangladesh.…”

Section: Resultsmentioning

confidence: 97%

Do Good Corporate Governance and Financing Risk Management Matter for Islamic Banks’ Performance in Indonesia?

Agustina

Majid

2020

Etikonomi

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The purpose of this study is to examine and analyze the influence of the implementation of Good Corporate Governance principles and financing risk management on the Islamic banks’ performance in Indonesia over the 2010-2019 period. The target population of this study is the Islamic Commercial Banks (Bank Umum Syariah -BUS) in Indonesia that has continuously published the annual report during the study period. Using the purposive sampling method, 11 Islamic Commercial Banks were selected and analyzed using the panel regression technique. This study measures the dependent variable of performance of Islamic banks using the Return on Asset (ROA), while the independent variables comprising Good Corporate Governance (GCG), Non-Performing Financing (NPF), and Financing to Deposit Ratio (FDR). Based on the common effect panel/pooled least Square models, the study found that GCG and FDR have a positive significant influence on the Islamic banks’ performance. Meanwhile, NPF is found to have a negative significant influence on the performance of Islamic banks. These findings imply that to further promote the performance, the Islamic banks should enhance the implementation of GCG principles and minimize NPF by improving financing risk management and enhance their financing by allocating their existing funds to the bankable and productive economic sectors.

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Do business strategies vary across firms in the banking industry? New perspectives from the bank size–profitability nexus

Olaniyi

Al‐Faryan

2022

Manage Decis Econ

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This study examines the roles of interdependence and policy variations across firms in the causality between bank size and profitability in Nigeria, using secondgeneration estimators and the Dumitrescu-Hurlin panel Granger non-causality test.The findings support different business strategies and policy variances across banks.Causality is found non-existent in the cases of 11 banks. A unidirectional causality from size to profitability is established in two banks while evidence of a unidirectional causality is established from profitability to bank size in the other two banks. This study concludes that cross-sectional dependence and policy variations across firms matter in the bank size-profitability nexus.

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The impact of bank-specific and macroeconomic variables on profitability of Islamic rural bank in Indonesia

Cited by 6 publications

References 9 publications

The Impact of Financing Risk on Islamic Banking Performance in Indonesia

The Impact of Financing Risk on Islamic Banking Performance in Indonesia

Do Good Corporate Governance and Financing Risk Management Matter for Islamic Banks’ Performance in Indonesia?

Do business strategies vary across firms in the banking industry? New perspectives from the bank size–profitability nexus

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