ISLAMIC BANKING PERFORMANCE TO MAINTAIN PROFIT-SHARING FINANCING GROWTH: EVIDENCE FROM INDONESIA

Authors

  • Dian Kurniawati Department of Accounting, Faculty of Economics and Business, Perbanas Institute
  • Irawati Junaeni Department of Accounting, Faculty of Economics and Business, Perbanas Institute
  • Ridarmelli Ridarmelli Department of Accounting, Faculty of Economics and Business, Perbanas Institute

Keywords:

Profit-sharing financing, capital adequacy ratio, third-party funds, non-performing financing, financing to deposits ratio

Abstract

Abstract –  This research aims to analyze the impact of the performance or level of health of Islamic banks, such as the level of capital adequacy, growth of third-party funds, financing risk, and liquidity risk, on the growth of profit-sharing financing in the Islamic banking industry in Indonesia. The data used in this research is secondary data on Islamic banking statistics in Indonesia published by the Financial Services Authority (OJK) and Bank Indonesia (BI) from the first quarter of 2014 to the last quarter of 2021. Time series data processing uses the Vector Error approach Correction Model (VECM). Simultaneously, the level of capital adequacy proxied by the capital adequacy ratio, third-party funds, financing risk proxied by non-performing financing, and liquidity risk proxied by the financing to deposits ratio have a significant effect on profit-sharing financing. Meanwhile, partially, profit-sharing financing itself and the level of capital adequacy in the previous period have an impact on changes in profit-sharing financing in the short term. In the long term, financing risk and liquidity risk have a significant effect on profit-sharing financing. Meanwhile, in this research, third-party funds did not significantly affect the growth of profit-sharing financing.

Keywords:  Profit-sharing financing, capital adequacy ratio, third-party funds, non-performing financing, financing to deposits ratio

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Published

2023-12-15