Financing Diversification and Profitability of Islamic Banking in Indonesia

Iin Emy Prastiwi, Anik Anik

Abstract


This study aims to determine the effect of Islamic bank financing diversification based on economic sectors and based on the type of use on profitability. This study uses financing data for Islamic Banks and Islamic Business Units in 2014-2018. The data in this study are the times series data. Data analyzed by used multiple linear regression analyses. This research provides that results that the HHI of diversification of Islamic bank financing based on the economic sector is positively related to increasing the profitability of Islamic banks. It means diversification of financing based on high economic sectors, has an impact on reducing the profitability of Islamic banks in Indonesia. While the HHI of diversification of financing by type of use give a significant influence in increasing the profitability of Islamic banks in a negative direction. If Islamic banking only focuses on channeling financing to the consumption sector, it can have an impact on decreasing profitability. So that Islamic banking needs to equalize the distribution of consumption to the working capital and investment sectors. The results of this study are interesting because it can be used as a reference for Islamic banking in determining the policy of diversification of financing to obtain high profitability with low risk.

Keywords


diversification, profitability, Islamic banks

Full Text:

PDF

References


Acharya, V. V., Hasan, I., & Saunders, A. (2006). Should banks be diversified? Evidence from individual bank loan portfolios. Journal of Business, 79(3), 1355–1412. https://doi.org/10.1086/500679

Alshomaly, I. (2014). Bank Diversification & the Systematic Risk of Equity Portfolio. Europan Scientific Journal, 10(16), 171–184.

Beck, T., & De Jonghe, O. (2014). Lending Concentration , Bank Performance and Systemic Risk. In World Development Report 2014: Background Paper (Issue September 2013).

Belguith, H., & Bellouma, M. (2018). The Impact of Loan Portfolio Diversification on Tunisian Bank’s Profitability. International Journal of Emerging Research in Management and Technology, 6(6), 35. https://doi.org/10.23956/ijermt.v6i6.242

Buch, C. M., Schertler, A., & Westernhagen, N. Von. (2006). Heterogeneity in lending and sectoral growth : evidence from German bank-level data. Discussion Paper Series 2 : Banking and Financial Studies. Banking, 04.

Chandini Dewi, G. A. K., Wiagustini, L. P., & Panji, S. I. . (2017). Peran Profitabilitas Memediasi Pengaruh Diversifikasi Terhadap Return Saham. Jurnal Ekonomi Dan Bisnis Universitas Udayana, 6(1), 167–196.

Chatti, M. A., Kablan, S., & Yousfi, O. (2013). Are Islamic Banks Sufficiently Diversified ? : An Empirical Analysis of Eight Islamic Banks in Malaysia. Islamic Economic Studies, 21(2), 23–54. https://doi.org/10.12816/0001557

Chen, N., Liang, H. Y., & Yu, M. T. (2018). Asset diversification and bank performance: Evidence from three Asian countries with a dual banking system. Pacific Basin Finance Journal, 52(August 2017), 40–53. https://doi.org/10.1016/j.pacfin.2018.02.007

Chepkorir, D., Nyamweya, S., & Mureithi, G. (2019). Effect of Bank Diversification on the Financial Distress of Commercial Banks Listed at the Nairobi Securities Exchange, Kenya. IOSR Journal of Business and Management (IOSR-JBM), 21(6), 39–45. https://doi.org/10.9790/487X-2106043945

Christianti, A. (2011). Diversifikasi kredit terhadap profitabilitas dan probabilitas kegagalan bank. Jurnal Keuangan Dan Perbankan, 15(3), 428–436.

Daud, W. M. N. W., Norwani, N. M., Mansor, A. A., & Endut, W. A. (2016). Does financing decision influence corporate performance in Malaysia? International Journal of Economics and Financial Issues, 6(3), 1165–1171.

David, F. R. (2008). Manajemen Strategis: Konsep. (10th ed.). Salemba Empat.

Diamond, D. (1984). Financial intermediation and delegated monitoring. The Review of Economic Studies, 51(3), 393-414. https://doi.org/10.2307/2297430

Guerry, N., & Wallmeier, M. (2017). Valuation of diversified banks: New evidence. Journal of Banking and Finance, 80, 203–214. https://doi.org/10.1016/j.jbankfin.2017.04.004

Inder Singh, R. (2014). Central Cooperative Banks in Punjab. Journal of Finance and Bank Management, 2(2), 27–41.

Jahn, N., Memmel, C., & Pfingsten, A. (2013). Banks’ concentration versus diversification in the loan portfolio: New evidence from Germany. In Bundesbank Discussion Paper (Issue 53).

Kuncoro, M. dan S. (2002). Manajemen Perbankan Teori dan Aplikasi. BPFE.

Marwa, C. N. (2013). Performance Appraisal Practices Among Commercial Banks in Kenya. October. Unpublished master’s thesis. Business Administration: University Of Nairobi

Meija, J. F. (2011). Export Diversification and Economic Growth : An Analysis of Columbia’s Export Competitiveness in the European Union’s Market. Springer Science & Business Media. https://doi.org/10.1007/978-3-7908-2742-2

Molyneux, P., & Yip, J. (2013). Income diversification and performance of Islamic banks. Journal of Financial Management, Markets and Institutions, 1, 47–66. https://doi.org/10.12831/73632

Mostak Ahamed, M. (2017). Asset quality, non-interest income, and bank profitability: Evidence from Indian banks. Economic Modelling, 63(January), 1–14. https://doi.org/10.1016/j.econmod.2017.01.016

Moudud-Ul-Huq, S., Ashraf, B. N., Gupta, A. Das, & Zheng, C. (2018). Does bank diversification heterogeneously affect performance and risk-taking in ASEAN emerging economies? Research in International Business and Finance, 46, 342–362. https://doi.org/10.1016/j.ribaf.2018.04.007

Mulwa, J. M. (2018). Sectoral credit diversification , bank performance and monitoring effectiveness ; a cross-country analysis of east African banking industries. Journal of Finance and Invesment Analysis, 7(2), 17–36.

Munawir, S. (2002). Analisa Laporan Keuangan. Liberty.

Nisar, S., Peng, K., Wang, S., & Ashraf, B. N. (2018). The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries. International Journal of Financial Studies, 6(2), 40. https://doi.org/10.3390/ijfs6020040

Otoritas Jasa Keuangan. (2015). Potensi Pertumbuhan Ekonomi ditinjau dari Penyaluran Kredit Perbankan Kepada Sektor Prioritas. Otoritas Jasa Keuangan Indonesia, 58.

Prastiwi, I. E., & Anik. (2020). Diversifikasi Kredit, Monitoring dan Kinerja Perbankan di Indonesia. Jurnal Ilmiah Ekonomi Islam, 6(01), 80–86. https://doi.org/ttp://dx.doi.org/10.29040/jiei.v6i1.775

Prastiwi, I. E., & Anik. (2020). The Impact of Credit Diversification on Credit Risk and Performance of Indonesian Banks. Global Review of Islamic Economics and Bisiness, 8(01), 13-21. https://doi.org/10.14421/grieb.2020.081-02

Siamat, D. (2005). Manajemen Lembaga Keuangan. “Kebijakan Moneter dan Perbankan" (1st ed.). Faculty of Economics, University of Indonesia.

Simpasa, A., & Pla, L. (2016). Sectoral Credit Concentration and Bank Performance in Zambia. The Working Paper Series (WPS), 245(245), 25.

Siregar, Sylvia Veronica Diyanty, Vera Christiningrum, MF Yuniasih, R. (2014). Efek Entrenchment dan Alignment Pemegang Saham Pengendali pada Strategi Diversifikasi dan Kinerja Perusahaan dan Peran Corporate Governance. 24–27. https://www.academia.edu/21040387/Efek_Entrenchment_Dan_Alignment_Pemegang_Saham_Pengendali_Pada_Strategi_Diversifikasi_Dan_Kinerja_Perusahaan_Dan_Peran_Corporate_Governance

Sulastri, U. (2013). Pengaruh Strategi Diversifikasi Terhadap Kinerja Keuangan Perusahaan Dengan Struktur Modal Sebagai Variabel Intervening (Pada Perusahaan Sektor Properti dan Real Estate di Bursa Efek Indonesia Periode 2009-2013. Unpublished master’s thesis. Accounting Department, Faculty of Economics. The State University of Surabaya

Tabak, B. M., Fazio, D. M., & Cajueiro, D. O. (2011). The effects of loan portfolio concentration on Brazilian banks’ return and risk. Journal of Banking and Finance, 35(11), 3065–3076. https://doi.org/10.1016/j.jbankfin.2011.04.006

Turkmen, S. Y., & Yigit, I. (2012). Diversification in Banking and its Effect on Banks ’ Performance : Evidence from Turkey. American International Journal of Contemporary Research, 2(12), 111–119.

Umam, K. (2013). Manajemen Perbankan Syariah. Pustaka Setia.

Weygandt et.al. (2009). Accounting Principles. Salemba Empat.




DOI: http://dx.doi.org/10.29040/jap.v21i02.1817

Refbacks

  • There are currently no refbacks.


Jurnal Akuntansi dan Pajak, ISSN 1412-629X l E-ISSN 2579-3055

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
web analytics