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Analysis of Internal and External Determinant Variables towards Profitability of Islamic Banking in Indonesia (2014-2020)

Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE)

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Title Analysis of Internal and External Determinant Variables towards Profitability of Islamic Banking in Indonesia (2014-2020)
 
Creator Ramadhani, Febri
Rizkan, Muhammad
 
Description Indonesia is a country that adheres to a dual banking system, namely conventional and Islamic Banking. The growth rate of Islamic banking in the last three years is higher than conventional banking. However, in total assets, Islamic banking is still far behind conventional banking. Therefore, it is necessary to study further the performance of Islamic banking reflected in its profitability. So, it becomes an alternative input in determining Islamic banking policies. This study aims to know the factors affecting the profitability (ROA) of Islamic Banking in Indonesia. The data used are the 2014-2020 monthly data in the amount of 79 data. The method used in this study is a Vector Error Correction Model (VECM) to determine the effect of long-run and short-run relationships. The results of the study showed that the long-run relationship of the NPF variable affected and was significant positive toward ROA, CAR affected and was significant negative toward ROA, while the inflation variable had a negative relationship and not significant toward ROA. The results of the short-run relationships showed that the NPF and CAR variables positively affected ROA, while the inflation variable did not significantly affect the ROA.
 
Publisher Prodi. Ekonomi Syariah, Institut Pesantren KH Abdul Chalim
 
Date 2021-08-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://e-journal.ikhac.ac.id/index.php/iijse/article/view/1442
10.31538/iijse.v4i1.1442
 
Source Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE); Vol 4 No 1 (2021): Sharia Economic: July, 2021; 18-34
2621-606X
10.31538/iijse.v4i1
 
Language eng
 
Relation https://e-journal.ikhac.ac.id/index.php/iijse/article/view/1442/694
 
Rights Copyright (c) 2021 Febri Ramadhani, Muhammad Rizkan
http://creativecommons.org/licenses/by-sa/4.0