Bank Specific & Macroeconomic Determinants of Islamic Bank Profitability in Indonesia Dedi Supiyadi & Meta Arief
Sekolah Pascasarjana - Universitas Pendidikan Indonesia
Pendidikan Akuntansi - Universitas Pendidikan Indonesia
Abstract
Purpose, This paper aims to examine the effect of factors that contribute to the profitability of Islamic banks in Indonesia over the period 2008-2017. Methodology, This research employs the explanatory method. We use secondary data obtained from the OJK to examine the Determinants of Islamic Bank Profitability and then we analyse the data using the GMM technique. Findings, The study found that only Bank Size had a positive effect both ROA and ROE while capital, credit risk and liquidity had a negative effect on Islamic bank profitability in Indonesia. Finally, the macroeconomic determinant showed that only inflation had positive effect while GDP had no significant effect on Islamic bank profitability. Practical implications, The result indicates that Islamic banks in Indonesia need to be developed and well supported by the government through an independent regulation out of the Bank of Indonesia. This means Islamic bank need to develop supporting regulations and products based on Islamic law and Sunnah. Originality, this paper provide new Islamic Bank information and applies the GMM technique which previous studies never used to examine the Islamic bank profitability in Indonesia
