The Effect of Bank-Specific Characteristics on Financial Performance of Indonesias Islamic Banking Industry 2010-2014
Deni Abdulatip and Asep Kurniawan
Sutaatmadja Economic College
Indonesia’s Islamic banking industry has grown consistently since several years ago. This fact was shown by developing of total asset, total financing, and total deposit which known increasing in positive consistently, particularly in 2010-2014. In the other hand, growth of its profitability has declined drastically in 2014. Therefore, the aim of this study is investigating the determinant factors of Islamic banking industry’s profitability. The predictors of dependent variable (ROA/Profitability) were divided in six part which are bank specific characteristic indicators, such as Bank Size, Capital (CAR), Liquidity (FDR), Credit Risk (NPF), Operation Efficiency (BOPO), and Financial Risk.
Multiple regression method was used as research methodology. Furthermore, the sample was Islamic banking industry which were divided in three categories, such as commercial Islamic bank (BUS), shariaa banking unit (UUS), and Islamic rural bank (BPRS). The result shows that bank specific characteristic indicators have significant impact in determining the profitability of Indonesia’s Islamic banking industry at 49,1% simultaneously. Furthermore, based on partial test, the three indicators of bank specific characteristics such as Bank Size (Ln Total Asset), Capital (Capital Adequacy Ratio), and Operation Efficiency (BOPO) were known to have significant impact in determining the variability of ROA (profitability) partially.
This result has ensured some previous discoveries of researchers which analyze the affecting of bank specific characteristic indicators toward Islamic banking profitability.
Topic: Financial Management and Accounting