Abstract
This study aims to determine how the Effect of Capital Adequacy Ratio (CAR) and Liquidity on Profitability of Islamic Commercial Banks in Indonesia for the 2015-2019 Period. The results of data processing using the SPSS 17 For Windows program resulted in multiple regression analysis with two independent variables and one dependent variable showing that Y = 1.108 +1.404X1 - 0.240 X2, meaning that profitability is influenced by Capital Adequacy Ratio (CAR) and Liquidity. Furthermore, the results show that the Capital Adequacy Ratio (CAR) and Liquidity variables can explain the Profitability variable 36%, the remaining 64% is explained by other variables. The results of the hypothesis test state that: Hypothesis 1 is accepted, this can be seen from the value of tcount>ttable, then the Capital Adequacy Ratio (CAR) has an effect on profitability. The second hypothesis is rejected, it can be seen from the value of tcountFtable, it is stated simultaneously that Capital Adequacy Ratio (CAR) and Liquidity have an effect on Profitability.
Highlights
Indonesia is one of the countries with the largest Muslim majority population in the world, indirectly this shows a huge potential for sharia sector economic activities in Indonesia
Public awareness of Islamic law will determine the amount of growth of Islamic economic activity in Indonesia
The Islamic banking sector is the sector that is most positively affected by the increasing public awareness of Islamic law, this is because every community activity is currently not separated from banking, either as a place to store funds that have been obtained or obtain funds as capital to run a business
Summary
Indonesia is one of the countries with the largest Muslim majority population in the world, indirectly this shows a huge potential for sharia sector economic activities in Indonesia. Public awareness of Islamic law will determine the amount of growth of Islamic economic activity in Indonesia. The Islamic banking sector is the sector that is most positively affected by the increasing public awareness of Islamic law, this is because every community activity is currently not separated from banking, either as a place to store funds that have been obtained or obtain funds as capital to run a business. By the end of 2019, there were 14 sharia commercial banks, 20 sharia business units and 164 sharia people's financing banks with total assets of Rp. 538.32 trillion, while the third party funds that can be collected is Rp. 425.29 trillion and distributed Rp. 365.13 trillion. The growth of sharia banking is very rapid, but it is common for every bank to have differences in its management in terms of finances, which can be presented in the following figure: IJMRA, Volume 5 Issue 01 January 2022 www.ijmra.in
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