Long Term Impact Profitability of Market Share Islamic Bank in Indonesia

Chitra Yuliashri Katili(1), Rifadli D Kadir(2*),


(1) Fakultas Ekonomi dan Bisnis Islam, IAIN Sultan Amai Gorontalo
(2) Fakultas Ekonomi dan Bisnis Islam, IAIN Sultan Amai Gorontalo
(*) Corresponding Author

Abstract


This paper aims to analyze the influence of the internal variables of Islamic banks on market share. Market share is one of the indicators used by Islamic banking to measure how much it contributes to the banking industry in Indonesia. The internal variables of Islamic banks used are Return On Assets, Capital Adequacy Ratio, Financing to Deposit Ratio, and Non Performing Financing. The relationship between bank internal variables and market share is measured using long-term regression, namely fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) regressions. Based on the results of this regression, it shows that the profitability variable proxied by Return On Assets and the Financing to deposit Ratio variable has a positive effect on the market share of Islamic banks in Indonesia. The Capital Adequacy Ratio and Non-Performing Financing variables reject the proposed hypothesis. These results conclude that in the long-term the market share of the variable return on assets and the financing to deposit ratio can increase the market share of Islamic banking in Indonesia.


Full Text:

PDF

References


Abbas, A., & Arizah, A. (2019). Marketability, profitability, and profit-loss sharing: evidence from sharia banking in Indonesia. Asian Journal of Accounting Research, 4(2), 315–326. https://doi.org/10.1108/AJAR-08-2019-0065

Abdul Wahab, H., Saiti, B., Rosly, S. A., & Masih, A. M. M. (2017). Risk-Taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators. Emerging Markets Finance and Trade, 53(1), 180–198.

Abdullah, A. (2017). A Comparison between Malaysia and Indonesia in Islamic Banking Industry. Research Journal of Business and Management, 4(3), 276–278. https://doi.org/https://doi.org/10.17261/pressacademia.2017.705.

Al Arif, M. N. R. (2017). Spin-off and market share in the Indonesian Islamic banking industry : a difference in difference analysis. Management & Marketing. Challenges for the Knowledge Society, 12(4), 540–550. https://doi.org/10.1515/mmcks-2017-0032.Introduction

Al Arif, M. N. R., & Awwaliyah, T. B. (2019). Market Share, Concentration Ratio and Profitability : Evidence from Indonesian Islamic Banking Industry. Journal of Central Banking Theory and Practice, 14(2), 189–201. https://doi.org/10.2478/jcbtp-2019-0020

Al Arif, M. N. R., & Rahmawati, Y. (2018). Determinant factors of market share : evidence from the Indonesian Islamic banking industry. Problems and Perspectives in Management, 16(1), 392–398. https://doi.org/10.21511/ppm.16(1).2018.37

Aminah, Soewito, Erina, N., Khairudin, & Damayanti, T. (2019). Financial Performance and Market Share in Indonesia Islamic Banking: Stakeholder Theory Perspective. Revista de Ciencias Humanas y Sociales, 2477–9385.

Anam, H., Rakim, A. A., Ghozi, S., & Winarni, W. (2018). Analisis Data Pergerakan Harga Saham Bank BUMN melalui Debt to Equity Ratio (DER), Return On Equity (ROE) dan Earning Per Share (EPS). JSHP: Jurnal Sosial Humaniora dan Pendidikan, 2(2), 124-134.

Dickey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series With a Unit Root. Journal of the American Statistical Association, 74(366), 427–431. https://doi.org/10.2307/2286348

Engle, R. F., & Granger, C. W. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica, 55(2), 251–276.

Fuadah, N., & Hakimi, F. (2020). Financial Performance dan Market Share Pada Bank Umum Syariah Devisa Indonesia : Perspektif Teori Stakeholder. Jurnal Penelitian Ipteks, 5(2), 180–186.

Gul, S., Irshad, F., & Zaman, K. (2011). Factors affecting bank profitability in Pakistan. Romanian Economic Journal, 14, 39.

Hanafi, S. M. (2021). Determinant of Market Share in the Indonesian Islamic Banking Industry. Muqtasid, 12(1), 1–16.

Harkati, R., Alhabshi, S. M., & Kassim, S. (2020). Does capital adequacy ratio influence risk-taking behaviour of conventional and Islamic banks differently? Empirical evidence from dual banking system of Malaysia. Journal of Islamic Accounting and Business Research, 11(9), 1989–2015. https://doi.org/10.1108/JIABR-11-2019-0212

Jeitschko, T. D., & Jeung, S. D. (2007). Do well-capitalised banks take more risk? Evidence from the korean banking system. Journal of Banking Regulation, 8(4), 291–315.

Kadir, R. D., Ratnasari, S. L., & Abduh, M. A. (2022). What Drives Non Performing Financing? Evidence from Islamic Rural Banks in Indonesia During Covid-19. Ikonomika, 6(2), 207–218. https://doi.org/10.24042/febi.v6i2.10757

Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90(1), 1–44.

Koni, W., Kadir, R., Anggriani, A., & Hasan, P. (2021). Can Non-Performing Financing Reduce Bank Asset ? Evidence From Islamic Rural Bank in Indonesia During. European Scholar Journal (ESJ), 2(12), 84–87.

Lasrin, D. A., Hidayati, S., & Permadhy, Y. T. (2021). Analisis faktor-faktor kinerja keuangan yang mempengaruhi market share perbankan syariah di Indonesia. Korelasi: Konferensi Riset Nasional Ekonomi, Manajemen Dan Akuntansi, 2(1), 728–743.

Ludiman, I., & Mutmainah, K. (2020). Analisis Determinan Market Share Perbankan Syariah di Indonesia ( Studi Empiris pada Bank Umum Syariah dan Unit Usaha Syariah yang Terdaftar di OJK Periode Maret 2017 sampai September 2019 ). Journal of Economic, Management, Accounting and Technology (JEMATech), 3(2), 169–181. https://doi.org/https://doi.org/10.32500/jematech.v3i2.1336

Maghfuriyah, A., Azam, S. M. F., & Shukri, S. (2019). Market structure and Islamic banking performance in Indonesia: An error correction model. Management Science Letters, 9, 1407–1418. https://doi.org/10.5267/j.msl.2019.5.010

Mirzaei, A. (2010). The Effect of Market Power on Stability and Performance of Islamic and Conventional Banks. Islamic Economic Studies, 18(1&2), 45–82.

Mirzaei, A., Moore, T., & Liu, G. (2013). Does market structure matter on banks’ profitability and stability? Emerging vs. advanced economies. Journal of Banking and Finance, 37(8), 2920–2937.

Noor Rohman, S., & Karsinah, K. (2018). Analisis Determinan Pangsa Pasar Bank Syariah dengan Kinerja Bank Syariah di Indonesia Periode 2011-2016. Economics Development Analysis Journal, 5(2), 135–142. https://doi.org/10.15294/edaj.v5i2.22026

Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin OfEconomics and Statistics, 61(S1), 653–670.

Pedroni, Peter. (2000). Fully modified OLS for heterogeneous cointegrated panels. In Advances in Econometrics (Vol. 15). https://doi.org/10.1016/S0731-9053(00)15004-2

Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335–346. https://doi.org/10.1093/biomet/75.2.335

Purboastuti, N., Anwar, N., & Suryahani, I. (2015). Pengaruh Indikator Utama Perbankan Terhadap Pangsa Pasar Perbankan Syariah (The Influence of Main Banking Indicator to Islamic Bank’s Market Share). JEJAK: Journal of Economics and Policy, 8(1), 13–22.

Rahman, A. (2016). Analysis of Factors That Influence The Islamic Bank’s Market Share. Analytica Islamica, 5(2), 2910314.

Saputra, B. (2014). Faktor-faktor Keuangan yang Mempengaruhi Market Share Perbankan Syariah di Indonesia. Akuntabilitas, 7(2), 123–131.

Setyawati, I., Kartiki, D., Rachman, S., & Febrian, E. (2015). Assessing the Islamic Banking Financial Performance in Indonesia. International Journal of Education and Research, 3(10), 233–248.

Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order integrated systems. Econometrica, 61(4), 783–820.

Suryani. (2011). Analisis Pengaruh Financing to Deposit Ratio (FDR) terhadap Profitabilitas Perbankan Syariah di Indonesia. Jurnal Walisongo, 19(1), 47–74.

Wahyudi, S., Sari, S. P., Hersugondo, H., & Udin, U. (2019). Capital adequacy ratio, profit-sharing and return on asset: Case study of Indonesian sharia banks. WSEAS Transactions on Business and Economics, 16, 138–144.

Wouters, P. (2009). Islamic Banking in Turkey, Indonesia and Pakistan: A Comparison with Malaysia. Islamic Finance News, 4(42).




DOI: 10.24235/amwal.v15i1.13316

Article Metrics

Abstract view : 0 times
PDF - 0 times

Refbacks

  • There are currently no refbacks.


 Al Amwal Indexed by:

          

 

 

This journal provides immediate open access to its content on the principle that making research freely available to the public supports a greater global exchange of knowledge. Creative Commons Licence
This work is licensed under a Creative Commons Attribution 4.0 International License.-->View My Stats