Safitri, Julia and Rahmati, Arinal and Jayadi, and Affandi, Muhamad Arief (2020) Do Liquidity And Capital Adequacy Ratio Matter For Islamic Banks Performance In Indonesia? An Analysis Using Financing Risk As Mediator. SHARE: Jurnal Ekonomi dan Keuangan Islam, 10 (1). pp. 138-154.
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10. DO LIQUIDITY AND CAPITAL ADEQUACY RATIO MATTER FOR ISLAMIC BANKS PERFORMANCE IN INDONESIA AN ANALYSIS USING FINANCING RISK AS MEDIATOR.pdf Download (472kB) | Preview |
Abstract
This study is driven by the inconsistent findings of previous research on assessing the determinants of banks' performance. In addition, financing risk has been indicated as a significant variable in mediating the related research but failed to incorporate in previous research. Therefore, this study aims to assess the role of liquidity and Capital Adequacy Ratio (CAR) on Islamic bank's performance in Indonesia using financing risk as a mediator. Data were collected from 14 samples operating in Indonesia in the period 2013-2019. They were then analyzed using Partial Least Squares – Structural Equation Modelling (PLS-SEM) with Warp PLS 7.0 as a tool of analysis. The results show that variable liquidity (FDR) significantly influences Bank Performance mediated by Financing Risk (NPF). Meanwhile, variable CAR shows no significant influence on Bank Performance even when it was mediated by the Financing Risk variable (NPF). This finding implies that providing short-term financing is more profitable for an Islamic bank than a longer one. This finding is in line with the Commercial Loan Theory, which states that it is better to provide loans in the short term to minimize the possibility of defaults that will impact the bank's performance.
| Item Type: | Article |
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| Additional Information (ID): | 23/B0068.pdf |
| Uncontrolled Keywords: | Islamic Banking, Commercial Loan Theory, Liquidity, Non-Performing Financing. |
| Subjects: | 300 Social Science > 330-339 Economics (Ilmu Ekonomi) > 332 Financial Economics, Finance (Ekonomi Keuangan dan Finansial, Ekonomi Biaya dan Pembiayaan) |
| Divisions: | Koleksi Digital > Artikel |
| Depositing User: | CR Cherrie Rachman |
| Date Deposited: | 25 May 2023 03:35 |
| Last Modified: | 26 Sep 2023 04:06 |
| URI: | http://repository.ut.ac.id/id/eprint/10485 |
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