Estimating Profitability of Islamic Banking in Indonesia
The Islamic banking industry in Indonesia had experienced rapid growth since the government passed the Islamic banking law in 2008. Although growing fast but the market share of Islamic banking was still low. To increase the market share of Islamic banking, it was necessary to encourage Islamic bank...
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| Format: | Article |
| Language: | English |
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Universitas Merdeka Malang
2018-10-01
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| Series: | Jurnal Keuangan dan Perbankan |
| Subjects: | |
| Online Access: | http://jurnal.unmer.ac.id/index.php/jkdp/article/view/2197 |
| _version_ | 1811261959770734592 |
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| author | Agus Widarjono |
| author_facet | Agus Widarjono |
| author_sort | Agus Widarjono |
| collection | DOAJ |
| description | The Islamic banking industry in Indonesia had experienced rapid growth since the government passed the Islamic banking law in 2008. Although growing fast but the market share of Islamic banking was still low. To increase the market share of Islamic banking, it was necessary to encourage Islamic banking performance. One of the performances of Islamic banking investigated in this study was profitability. We examined the profitability of Islamic banking using both internal and external factors. The method used to estimate the profitability of Islamic banking was the Autoregressive Distributed Lag Model (ARDL) method with monthly data. The estimation results showed that both internal and external factors affect the profit of Islamic banking. Asset, FDR, efficiency, and NPL affect profitability. An important variable affecting profitability were the bad financing (NPF). While the external factor influencing the profit of Islamic banking was the exchange rate and inflation. The implication of this result was that Islamic banking must be able to manage well the bad financing. Since NPF also depends on macroeconomic conditions, the government must be able to manage macroeconomic performance well such as stabilizing the exchange rate. |
| first_indexed | 2024-04-12T19:16:24Z |
| format | Article |
| id | doaj.art-e1e2326145bb492baa21141a008226e1 |
| institution | Directory Open Access Journal |
| issn | 1410-8089 2443-2687 |
| language | English |
| last_indexed | 2024-04-12T19:16:24Z |
| publishDate | 2018-10-01 |
| publisher | Universitas Merdeka Malang |
| record_format | Article |
| series | Jurnal Keuangan dan Perbankan |
| spelling | doaj.art-e1e2326145bb492baa21141a008226e12022-12-22T03:19:45ZengUniversitas Merdeka MalangJurnal Keuangan dan Perbankan1410-80892443-26872018-10-0122356857910.26905/jkdp.v22i3.2197Estimating Profitability of Islamic Banking in IndonesiaAgus Widarjono0Department of Economics, Faculty of Economics, Universitas Islam Indonesia Yogyakarta Jl. Ringroad Utara, Condong Catur, Sleman, Yogyakarta, 55283, Indonesia The Islamic banking industry in Indonesia had experienced rapid growth since the government passed the Islamic banking law in 2008. Although growing fast but the market share of Islamic banking was still low. To increase the market share of Islamic banking, it was necessary to encourage Islamic banking performance. One of the performances of Islamic banking investigated in this study was profitability. We examined the profitability of Islamic banking using both internal and external factors. The method used to estimate the profitability of Islamic banking was the Autoregressive Distributed Lag Model (ARDL) method with monthly data. The estimation results showed that both internal and external factors affect the profit of Islamic banking. Asset, FDR, efficiency, and NPL affect profitability. An important variable affecting profitability were the bad financing (NPF). While the external factor influencing the profit of Islamic banking was the exchange rate and inflation. The implication of this result was that Islamic banking must be able to manage well the bad financing. Since NPF also depends on macroeconomic conditions, the government must be able to manage macroeconomic performance well such as stabilizing the exchange rate.http://jurnal.unmer.ac.id/index.php/jkdp/article/view/2197Autoregressive Distributed Lag ModelExternal FactorInternal FactorIslamic BankingProfitability |
| spellingShingle | Agus Widarjono Estimating Profitability of Islamic Banking in Indonesia Jurnal Keuangan dan Perbankan Autoregressive Distributed Lag Model External Factor Internal Factor Islamic Banking Profitability |
| title | Estimating Profitability of Islamic Banking in Indonesia |
| title_full | Estimating Profitability of Islamic Banking in Indonesia |
| title_fullStr | Estimating Profitability of Islamic Banking in Indonesia |
| title_full_unstemmed | Estimating Profitability of Islamic Banking in Indonesia |
| title_short | Estimating Profitability of Islamic Banking in Indonesia |
| title_sort | estimating profitability of islamic banking in indonesia |
| topic | Autoregressive Distributed Lag Model External Factor Internal Factor Islamic Banking Profitability |
| url | http://jurnal.unmer.ac.id/index.php/jkdp/article/view/2197 |
| work_keys_str_mv | AT aguswidarjono estimatingprofitabilityofislamicbankinginindonesia |