Determinant of Indonesian Islam Bank’s Profitability: Lessons from the BRI Syariah case

Authors

  • Agus Widarjono Department of Economics, Faculty of Business and Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia
  • Ayu Salandra
  • Indah Susantun
  • Sarastri Mumpuni Ruchba

DOI:

https://doi.org/10.29040/jiei.v8i3.6542

Keywords:

BRI Syariah, Return on Asset, Return on Equity, ARDL

Abstract

Profit is the main key to the success and sustainability of Indonesian Islamic banks that join the banking industry in Indonesia as the last players. This study investigates the profitability of Islamic banks in Indonesia for the BRI Syariah case. Islamic banks' profitability is measured by two measurements, namely Return on Assets (ROA) and Return on Equity (ROE). This study uses the well-known Autoregressive Distributed lag model (ARDL) as a dynamic time series regression method using quarterly data from 2009Q1 to 2020Q4. The explanatory variables are asset, capital adequacy ratio (CAR), financing, cost-income ratio (CIR) and GDP. The findings indicate that specific bank variables and macroeconomic variables influence profitability. Size, CAR, and financing have a negative effect on profits while operating inefficiency has a negative effect on profits. This finding also shows that high economic growth will boost the profits of Islamic banks.

References

Aisyah, S., & Hosen, M. N. (2018). Total Factor Productivity and Efficiency Analysis on Islamic Banks in Indonesia. Jurnal Keuangan Dan Perbankan, 22(1), 137–147. https://doi.org/10.26905/jkdp.v22i1.1333

Anggraini, D., & Mawardi, I. (2019). Analisis Faktor-Faktor yang Mempengaruhi Profitabilitas Bank Umum Syariah di Indonesia. Jurnal Ekonomi Syariah Teori Dan Terapan, 6(8), 1607–1619.

Azad, A. S. M. S., Azmat, S., Chazi, A., & Ahsan, A. (2018). Can Islamic banks have their own benchmark? Emerging Markets Review, 35, 120–136. https://doi.org/10.1016/j.ememar.2018.02.002

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(February), 40–53. https://doi.org/10.1016/j.pacfin.2018.02.007

Dewi, F. K., & Sudarsono, H. (2021). Analisis Profitabilitas Bank Syariah Di Indonesia: Pendekatan Autoregressive Distributed Lag (ARDL). Al-Mashrafiyah: Jurnal Ekonomi, Keuangan, Dan Perbankan Syariah, 5(1), 59. https://doi.org/10.24252/al-mashrafiyah.v5i1.20281

Hamid, F. S. (2017). The Effect of Market Structure on Banks’ Profitability and Stability: Evidence from ASEAN-5 Countries. International Economic Journal, 31(4), 578–598. https://doi.org/10.1080/10168737.2017.1408668

Hasibuan, A. F. H., Falahuddin, & Ulva, H. (2021). Pengaruh Bopo, Fdr Dan Npf Terhadap Profitabilitas (Roa) Pada Bank Syariah Periode 2009-2019. El-Amwal, 4(1), 1–12. https://doi.org/10.29103/el-amwal.v4i1.3920

Ikramina, C., & Sukmaningrum, P. S. (2021). Macroeconomic Factors on Non-Performing Financing in Indonesian Islamic Bank: Error Correction Model Approach. Jurnal Ekonomi Dan Bisnis Islam (Journal of Islamic Economics and Business), 7(1), 34. https://doi.org/10.20473/jebis.v7i1.23647

Kasanah, R., Abidillah, A. F., & Rusgianto, S. (2022). Assessing the internal factor affecting the bank profitability in Indonesia : Case of dual banking system. Jurnal Ekonomi & Keuangan Islam, 8(2), 167–181.

Kasri, R. A., & Azzahra, C. (2020). Determinants of Bank Stability in Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 153–166. https://doi.org/10.15408/sjie.v9i2.15598

Nahar, F. H., & Prawoto, N. (2017). Bank’S Profitability in Indonesia: Case Study of Islamic Banks Period 2008-2012. Jurnal Ekonomi & Studi Pembangunan, 18(2). https://doi.org/10.18196/jesp.18.2.4043

Paulin, O., & Wiryono, S. K. (2015). Determinants of Islamic Banks’ Profitability in Indonesia. Journal of Businesa and Management, 4(1), 175–185. https://doi.org/10.4108/eai.3-8-2019.2290731

Pesaran, M. H., & Shin, Y. (1999). Econometrics and Economic Theory in the 20th Century. Econometrics and Economic Theory in the 20th Century. https://doi.org/10.1017/ccol521633230

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616

Sriyana, J. (2015). Islamic banks’ profitability amid the competitive financing in Indonesia. International Journal of Applied Business and Economic Research, 13(4), 1695–1710.

Sutrisno, & Widarjono, A. (2018). Maqasid Sharia Index, Banking Risk and Performance Cases in Indonesian Islamic Banks. Asian Economic and Financial Review, 8(9), 1175–1184. https://doi.org/10.18488/journal.aefr.2018.89.1175.1184

Suwarno, R. C., & Muthohar, A. M. (2018). Analisis Pengaruh NPF, FDR, BOPO, CAR, dan GCG terhadap Kinerja Keuangan Bank Umum Syariah di Indonesia Periode 2013-2017. BISNIS : Jurnal Bisnis Dan Manajemen Islam, 6(1), 94. https://doi.org/10.21043/bisnis.v6i1.3699

Warninda, T. D., Ekaputra, I. A., & Rokhim, R. (2019). Do Mudarabah and Musharakah financing impact Islamic Bank credit risk differently? Research in International Business and Finance, 49, 166–175. https://doi.org/10.1016/j.ribaf.2019.03.002

Widarjono, A. (2018). Estimating Profitability of Islamic Banking in Indonesia. Jurnal Keuangan Dan Perbankan, 22(3), 568–579. https://doi.org/10.26905/jkdp.v22i3.2197

Widarjono, A. (2021). The Role of Equity Financing on the Proï¬tability of Indonesian Islamic Banks. Muqtasid: Jurnal Ekonomi Dan Perbankan Syariah, 12(2), 129–143. https://doi.org/10.18326/muqtasid.v12i2.129-143

Widarjono, A., Anto, M. B. H., & Sidiq, S. (2022). Sectoral Financing Concentration and Profitability of Islamic Banking in Indonesia. Share: Jurnal Ekonomi Dan Keuangan Islam, 11(1), 149. https://doi.org/10.22373/share.v11i1.11133

Widarjono, A., & Rudatin, A. (2021). Financing diversification and Indonesian Islamic bank’s non-performing financing. Jurnal Ekonomi & Keuangan Islam, 7(1), 45–58. https://doi.org/10.20885/jeki.vol7.iss1.art4

Downloads

Published

01-11-2022

How to Cite

Widarjono, A., Salandra, A., Susantun, I., & Ruchba, S. M. (2022). Determinant of Indonesian Islam Bank’s Profitability: Lessons from the BRI Syariah case. Jurnal Ilmiah Ekonomi Islam, 8(3), 3127–3135. https://doi.org/10.29040/jiei.v8i3.6542

Issue

Vol. 8 No. 3 (2022): JIEI : Vol.8, No.3, 2022

Section

Articles

Citation Check

License

The copyright of the article fully belongs to the Jurnal Ilmiah Ekonomi Islam and publishing rights belong entirely to LPPM STIE AAS Surakarta

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

Similar Articles

<< < 63 64 65 66 67 68 69 70 71 72 > >> 

You may also start an advanced similarity search for this article.