Effect of Capital Adequacy Ratio, Non-Performing Financing, Financing to Deposit Ratio, and Operational Expenses on Operational Income on the Profitability of Sharia Banking in Indonesia (2016-2020)

Abstract

The aim of this research is to analyze effect of capital adequacy ratio, non performing financing, financing to deposit ratio, and operational expenses on operational income on the profitability of Sharia Banking in Indonesia from 2016 to 2020. This research uses quantitative research methods. Population in this study is Sharia Commercial Bank registered with Bank Indonesia obtained from Sharia Banking Statistics via the Financial Services Authority website from 2016 to 2020. Sample used in this research is Sharia Commercial Bank which have been registered with Bank Indonesia since 2014, with using financial reports and Sharia Banking statistics found on the Financial Services Authority website. So, sample in this research is 12 Sharia Commercial Bank. The model used to test this hypothesis is a multiple regression analysis model. The research results show that capital adequacy ratio has a positive and significant effect on the profitability of Sharia Banking in Indonesia from 2016 to 2020. Non performing financing has a negative and insignificant effect on the profitability of Sharia Banking in Indonesia from 2016 to 2020. Financing to deposit ratio has a positive and insignificant effect on the profitability of Sharia Banking in Indonesia from 2016 to 2020. Operational expenses on operational income has a negative and significant effect on the profitability of Sharia Banking in Indonesia from 2016 to 2020. Keywords: Capital Adequacy Ratio, Non-Performing Financing, Financing to Deposit Ratio, Operational Expenses on Operational Income, Profitability