Determinants of Islamic Bank Performance: Evidence from Indonesian Islamic Banking Industry

Abstract

The purpose of this study is to investigate the determinants of Islamic banks performance using quarterly time series data from 2013 to 2017 of 12 Islamic commercial banking in Indonesia. Data analysis used Panel Least Square model with E-views that examined the impact of Banks specific (size, capital adequacy, liquidity Risk and operating cost), Income diversification and macro-economic (Gross Domestic Product and inflation) on bank performance (Return on Assets). The result shows that ROA is negatively related to liquidity risk, Operating Cost and inflation. This research is expected to be able to add information and references about the performance of Islamic banks and to develop short-term and long-term plans and strategies for management to optimize financial bank performance that can contribute to economic growth.