Abstract
This study aims to analyze and explain the factors that influence capital structure. Capital structure (CS) is measured by Debt to Equity Ratio (DER). Profitability is determined by Return on Assets (ROA) and Net Profit Margin (NPM). Loan to Deposit Ratio (LDR) is used as an indicator of risThis study aims to analyze and explain the factors that influence capital structure. Capital structure (CS) is measured by the Debt to Equity Ratio (DER). Profitability is determined by Return on Assets (ROA) and Net Profit Margin (NPM). Financial to Deposit Ratio (FDR) is used as an indicator of risk. Firm size is projected with Ln TA. The population of this study is all Islamic banks contained in Bank Indonesia, with observation periods starting in 2010 until 2018. The selection of samples in this study is a purposive sampling method. Data analysis and hypothesis testing were carried out by using the Eviews 11 program. The results of the study showed that sharia banking companies, all the independent variables simultaneously had a significant effect on the capital structure. Return on Assets (ROA) and firm size have affected the capital structure. Islamic bank managers in Indonesia choose the capital structure obtained from internal funds and the larger the company, it is necessary to arrange capital structure, to obtain the sustainability of the company in the future.k. Firm size is projected with Ln TA. The population of this research is all Islamic banks contained in Bank Indonesia, with observation periods starting in 2010 until 2017. The selection of samples in this study is purposive sampling method. Data analysis and hypothesis testing were carried out by structural equation model approach using the SPSS program. The results of the study showed that in Islamic sharia companies, all the independent variables simultaneously had a significant effect on the capital structure, partially only the Loan to Deposit Ratio (LDR) variable that did not affect the capital structure, while the other independent variables had a significant temporary effect on conventional Research conducted by the researchers themselves used some of the same variables and using the PLS 3.0 analysis tool there were similar results that only risks did not affect the capital structure. The conclusion of this study is that there is no difference in capital structure in Islamic banking companies and conventional banking companies.
Highlights
Capital is the core of the financial industry that supports banks by providing a buffer to absorb unexpected losses from their activities
The data used in this study were a combination of data between companies and time, or called panel data obtained from financial reports and annual reports published on the official website of Bank Indonesia, Financial Services Authority website obtained from the company's website, as well as from mass media coverage
The object of this research is all Islamic banking companies registered in Otoritas Jasa Keuangan (OJK), using a purposive sampling method with 3 criteria set out in this study, namely, (1) Islamic banking companies that have been registered in Bank Indonesia since 2010 until 2018; (2) Islamic banking companies that have published annual financial reports for three consecutive years, from 2010 to 2018; and (3) The Islamic banking company has information related to various measurement variables, such as Debt To Equity Ratio (DER), Net Profit Margin (NPM), Return on Assets (ROA), Financial to Deposit Ratio (FDR) and Firm Size (FS), and the samples are Bank BCA Syariah, BNI Syariah, BRI Syariah, Mandiri Syariah, and Mega Syariah
Summary
Capital is the core of the financial industry that supports banks by providing a buffer to absorb unexpected losses from their activities. The decision about capital structure is an important part of the banking industry because it is related to the interests of many parties such as investors, creditors, and company management. The capital structure as a strong pillar that provides a competitive advantage for the company (Kumar, Colombage, and Rao 2017). It must be budgeted and structured for future operations, let the company. Various theories regarding capital structure can explain the behavior of capital structure decision making by company management. Some research that tests the theory such as (Ahmeti and Prenaj 2015), (Al-Kahtani and AlEraij 2018), (Chechet and Olayiwola 2014)
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