THE INFLUENCE OF FIRM SIZE, CAPITAL ADEQUACY, AND PROFITABILITY ON LIQUIDITY RISK MANAGEMENT OF INDONESIA ISLAMIC BANKING

Abstract

One of the problems facing sharia banking is liquidity risk management. Liquidity risk management in Islamic banking faces greater challenges because they need to be in accordance with Sharia. This research aims to determine the influence of firm size, capital adequacy, and profitability with return on asset and return on equity as proxies, on Indonesian Islamic banking liquidity risk management which is listed in Bank Indonesia in the period 2010-2014. This research uses panel data from eleven Islamic banks. The dependent variable in this research is liquidity risk and the independent variables are firm size, capital adequacy, and profitability with return on asset and return on equity as proxies. The method of analysis in this research uses descriptive statistics, regression model selection, classic assumption test, and hypothesis test. The results show that firm size, capital adequacy, and profitability with return on asset and return on equity as proxies simultaneously affect liquidity risk management, where partially return on equity does not affect liquidity risk management. Keywords: Capital Adequacy, Firm Size, Islamic Banking, Liquidity Risk Management, Profitability