The Determinants Factors of Islamic Bank Profitability (Indonesia Empirical Cases)

Abstract

This study aims to analyze the effect of financing distribution (FDR), lending to micro and small business segments (MSF), promotion cost ratio (PCR), loan quality (NPF), and employee productivity ratio (LCR) on the profitability ratio of Islamic banks (Return on Assets-ROA). The method used in this study is a quantitative method using multiple regression models. The data used is secondary data from Islamic banks published during the 2012-2018 period. Furthermore, the number of samples from this study amounted to 42 samples of Islamic commercial banks. The results of this study are that the distribution of financing (FDR) has a positive and significant effect on the performance of Islamic banks (ROA), and the distribution of financing to the micro and small business segment has a positive and significant effect on the performance of Islamic banks (ROA). In addition, promotional activities and employee productivity also have a positive and significant impact on the performance of Islamic banks (ROA). At the same time, the quality of financing has a negative and significant influence on the performance of Islamic banks (ROA). The research implications are to provide information related to Islamic bank performance research regarding promotion effectiveness and employee productivity.

Keywords

• Islamic bank
• Financing
• Micro and Small Financing
• Promotion
• Financing Quality
• Productivity