An analysis on the factors affecting profitability level of Sharia banking in Indonesia

The purpose of this research is to analyze the influence of Capital Adequacy Ratio (CAR) Third Party Funds (TPF), Non Performing Financing (NPF), Financing to Deposit Ratio (FDR), Operation Cost Operating Income (OCOI), Net Operating Margin (NOM), Gross Domestic Product (GDP), inflation and Return on Asset (ROA) as a proxy of Islamic bank’s profitability in Indonesia during 2011-2014 periods. The population of study was Sharia banking (BS) in Indonesia. Time series data from Indonesian Banking Statistics 2011-2014 were used as the primary data. Multiple linear regression was applied as method of analysis. The result shows that CAR, NPF, FDR and NOM did not affect profitability, while TPF, OCOI had negative effect on profitability. Meanwhile, GDP and inflation variable had significant effect with positive direction.

Keywords: Sharia bank, ROA, TPF, NPF and inflation.
JEL Classification: G21, E31