Profitability Analysis of Sharia Commercial Banks in Indonesia

DOI

10.2991/978-94-6463-158-6_10How to use a DOI?

Keywords

Return on Asset; Capital Adequacy Ratio; Financing to Deposit Ratio; Non-Performing Financing; Vector Error Correction Model

Abstract

This research aims to analysis the influence of the Capital Adequacy Ratio (CAR), Financing to Deposit Ratio (FDR), Non-Performing Financing (NPF), and Operational Costs and Operating Income (BOPO) on Return On Assets (ROA) that represent the Profitability of Sharia Commercial Banks between the period 2016 to 2020. The method of analysis was employed VECM (Vector Error Correction Model). The results of data analysis show that in the short-term estimation only the Capital Adequacy Ratio and Non-Performing Financing variables significantly affect the ROA of Sharia Banks. On the other hand, other independent variables such as Financing to Deposit Ratio and operating expenses operating income do not significantly affect the ROA of Sharia banks. The results of the long-term estimation of the CAR, NPF, and BOPO variables have a significant effect on the ROA of Sharia commercial banks, and only the FDR variable does not show a significant influence on the ROA of Sharia commercial banks. Furthermore, in the results of the Impulse Response Function in Islamic commercial banks, profitability represented by ROA responds to shocks from the CAR, FDR, NPF, and BOPO variables positively and the Variance Decomposition results in the observation period show that the more dominant in the first period is the ROA variable itself which affect the development of ROA and in the next period is influenced by variations in the dependent variable and other independent variables.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Riqa Aniqa Helma Alam
AU  - Imam Mukhlis
PY  - 2023
DA  - 2023/06/26
TI  - Profitability Analysis of Sharia Commercial Banks in Indonesia
BT  - Proceedings of the Ninth Padang International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA 2022)
PB  - Atlantis Press
SP  - 117
EP  - 131
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-158-6_10
DO  - 10.2991/978-94-6463-158-6_10
ID  - Alam2023
ER  -