DETERMINANT ANALYSIS OF NET PROFIT MARGIN USING BANK-SPECIFIC VARIABLES OF ISLAMIC BANKS IN INDONESIA

• Main Author: Rahmat Ramadhan (19015054), Dary
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26398
• Institution: Institut Teknologi Bandung

Economic growth in a country is strongly influenced by the financial sector. The role of <br /> <br /> banks here is very important as an intermediary for exchanging money in the community. <br /> <br /> Banks can collect funds from the public and distribute funds in the form of productive loans <br /> <br /> that trigger a country's economic growth. In conducting its operational activities, the bank <br /> <br /> focuses its business activities as a manager of public funds as its main business activity. In <br /> <br /> addition, to be used to generate profits for banks, interest rates can also be used as a tool to <br /> <br /> influence a country's economy. <br /> <br /> Indonesia adopted a dual banking system, namely a conventional bank that runs a regular <br /> <br /> system and Islamic banks that adopt Islamic law in their operational activities. Islamic <br /> <br /> Banks provide a system of profit sharing from profits generated by funds managed in <br /> <br /> exchange for interest. To calculate the performance of Islamic banks to generate profit, the <br /> <br /> Net Profit Margin Ratio is derived from the calculation of the ratio of net income and total <br /> <br /> productive assets. <br /> <br /> This study obtains data from the Financial Services Authority (OJK) and official websites <br /> <br /> of each bank which includes 7 Islamic banks which are included in the category of foreign <br /> <br /> exchange Islamic banks and mixed Islamic banks which take place in the first quarter of <br /> <br /> 2011 to the fourth quarter of 2017. The analysis in research this is processed using the <br /> <br /> EGLS panel (cross-section weight). <br /> <br /> Regression results show that 4 of the 6 independent variables, namely bank size, Capital <br /> <br /> Adequacy Ratio, DSTA, and BOPO have a significant impact on Net Profit Margin. While <br /> <br /> Financial to Deposit Ratio and Credit Risk have no significant effect on Net Profit Margin <br /> <br /> Due to the size of the bank, Capital Adequacy Ratio, DSTA, and BOPO show a significant <br /> <br /> relationship with NPM, this study recommends that the relevant parties in the banking <br /> <br /> industry pay attention to these variables to maintain the Net Profit Margin value. From the <br /> <br /> results of the intercept shows Panin Dubai Syariah Bank must pay attention to their Net <br /> <br /> Profit Margin because it has the lowest intercept from other banks.