BANK PROFITABILITY ANALYSIS IN INDONESIA: CASE ON SHARIA BANK

M. Arya Rizki Pratama, Norma Rosyidah, Achmad Bagus Wani Bilhaq

Abstract


his research aims to analyze the influence of bank asset liability management on financial performance of Islamic commercial banks in Indonesia. This study describes the management of asset liabilities, which is influenced by several variables. The variables used in this study are capital adequacy, asset quality, earnings quality, liquidity, and third-party funds concerning asset liability management to examine the return on equity (ROE), a measure of bank profitability. The data used in this study is obtained from the financial reports of Islamic commercial banks from 2017-2022. The analytical method used is a quantitative analysis using the inferential analysis method. This study's results explain a positive relationship between asset liability management and the financial performance of Islamic commercial banks in Indonesia. The prohibition of usury constrains the Islamic banking system. Thus, Islamic banks will face more risks than conventional banks. Maybe because of this, the variables studied positively affect Return On Equity (ROE). CAR and ROA are essential determinants of the profitability of Islamic commercial banks in Indonesia. In the view of Islamic banks, CAR and ROA are other factors that have a significant impact on profitabilityKeywords: Capital Adequacy; Asset quality; Earnings Quality; Liquidity; Third-party Funds; ROE

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Proceeding International Conference of Islamic Economics and Business (ICONIEB)

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