Determinants оf Profitability оf the Islamic Banking Industry in Indonesia

Abstract

Abstract. Introduction. The indicator in the assessment of banking performance is the bank's ability to generate profits or profitability. Profitability is the bank's ability to generate profits from its capital and assets. The level of effectiveness of the bank in seeking or earning a profit can be seen from the income of an investment obtained from the sale or the banks' performance to earn a profit by measuring the level of profitability ratios in seeking profit. Purpose. This study aims to analyze the performance of Islamic banking in terms of profitability and the influence of Bank Size, Operational Efficiency, Market Share, Liquidity, Liquidity Risk, Net Operation Margin, and Giro Wajib Minimum on Profitability Islamic Banking Industry in Indonesia during the 2015-2020 period. Results. (1)The majority of banks have a low ROE value which means that most Islamic banks in Indonesia have low profitability (2) The size of Islamic banking and Operational Efficiency has a negative and significant effect on the profitability of Islamic banking (3) Market Share, Liquidity, Liquidity Risk and minimum statutory reserves positive and significant effect on profitability (3) Net Operation Margin has a positive and insignificant effect on the profitability of Islamic banking. Conclusions. Bank size, operational efficiency, market share, liquidity, liquidity risk, net operation margin, a minimum statutory reserve has a significant effect on the profitability of the Islamic banking industry in Indonesia. Liquidity, liquidity risk, net operation margin, statutory reserves have positive effects on the profitability of the Islamic banking industry in Indonesia.