Efficiency Determinant Analysis in Islamic Bank in Indonesia

Abstract

This study is aimed to discover efficiency determinant factors of Islamic banks in Indonesia to maintain financial system stability. Financial data of 11 Islamic Banks in Indonesia was obtained from 2010-2019. Purposive sampling method is employed to determine the obtained-sample with the availability of financial statements as criteria. There are two analysis data methods, firstly, Data Envelopment Analysis (DEA) is employed to calculate the efficiency score and analyze the efficiency condition of Islamic banks, and secondly multiple regression analysis which is employed to identify the determinant factors of efficiency. Based on the research model used, this study found that only the CAR and size variables were able to significantly increase the efficiency of Islamic banks. Likewise, macroeconomic variables have not been able to have any impact on the level of efficiency. Policy recommendations are also provided in the end of the discussion chapter.