CAMEL-BASED DETERMINANTS OF THE ASSETS GROWTH OF INDONESIAN SHARIA BANKS

• Main Author: Wijayanti, Arini
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/72301
• Institution: Institut Teknologi Bandung

Indonesia is a country with the higher level of the Muslim population in the world and it expected to have high opportunity to become Islamic finance leader in the world, especially on Sharia Banking. With highest number of Muslims in the world, which is 205 million people or 88.1% of the total population (data per 2010 by BPS) and the opportunities, that sharia bank is also attracted to non- Muslim. From the bank inside, several researches about sharia banking efficiency found that sharia banking is more efficient in some ways compare to the conventional bank. It expected that sharia economy, especially in banking industry, keeps growing well due to this potential market and performance. In 2013 to 2014, the growth of sharia bank in declining period. Nevertheless, the main problem of sharia bank in Indonesia is the small of market share, which is 4.83% compare to conventional banking 95.17%. failed to reach 2011 target of 5% and still remained below 5% until now prompting a public anecdote describing “5% traps of sharia banking” because of years trapped in the around number 5% market share. Currently, growth in sharia banking assets has recently been slower. This falling condition obstructs the target achievement for sharia banking to out from 5% traps condition. Bank performance analysis using CAMEL criteria has been using by Bank Indonesia to examine bank safe and soundness. This research tries to evaluate the significant level of CAMEL criteria toward sharia commercial bank asset growth and find the significant level of the sharia commercial bank asset growth with minimum five years of operation with research period from 2005- 2015. This research using secondary of financial publication data by aggregate 2005- 2015 of unbalance sharia bank. The tools used in this research is unbalanced panel data multilinear regression. The dependent variable that would be used are asset growth and the independent variable are capital adequacy ratio, fixed assets to capital, non-performing financing, return on assets, earnings before interest to total assets, return on equity, net operational income, operating income to operating expenses, financing to deposit ratio, total financing to total assets and allowance for earning assets losses to earning assets. The result of regression estimation in eleven dependent variable shows that the independent variable, which are CAR, FAC, NPF, ROA, NM, ROE, NIM, OCOI, FDR, TFTA, and ALEA, can explain 15.62% of the AG as dependent variable where the 84.38% explains by the other variables. The result for the F statistics indicates that there is significant relation of independent variable toward dependent variable. Independent variable ROA and TFTA have positive and significant relationship to Asset Growth while NPF has negative significant relationship to Asset Growth. While another variable; CAR, FAC, NM, ROE, NIM, FDR, OCOI and ALEA did not have significant relationship to Asset Growth. According to the result study, CAMEL criteria that relevant to asset growth is relates with asset quality, management and bank liquidity since they have significant value due to regression analysis. Financing has important rules in bank assets growth since the non- performing financing has significant negative relation, it means bank should press their non-performing financing by more selective in distributing financing if they want to increase their asset growth. The proportion of the financing toward the bank total assets also has significant relation, when the bank want to increase their asset growth, they should maintain carefully their liquidity by setting maximum proportion to profitable asset like investing in profitable financing. The management strategy for increasing bank return on asset by increasing profitable invests and financing to increase bank profitability would be relates with the increasing bank asset growth.