Abstract
For the five-year period 2014-2019, to determine and empirically demonstrate the influence of total bank assets on the stability of Islamic commercial banks in Indonesia, with the moderating variable of capital buffer. Sample size was determined using a purposive sampling approach, which included eight Islamic Commercial Banks. Using Moderated Regression Analysis to test hypotheses (MRA). As a result of these findings, it can be concluded that Islamic commercial banks in Indonesia are more stable if they have more diverse sources of income and greater financial inclusion. Islamic commercial banks in Indonesia's capital buffer can moderate the impact of income diversification on stability with the type of moderation generated by pure moderator, which indicates that stability can be improved. This is despite the fact that Islamic Commercial Banks' capital buffers are unable to counteract the negative effects of total assets and financial inclusion on their stability.
Highlights
It is possible that financial inclusion will modify the structure of the system in terms of the transactions, services, and access points that are made available to the general public
With a controlled variable capital buffer and total assets, income diversification and financial inclusion explain the stability of Islamic Commercial Banks in Indonesia between 2014 and 2019. 4.1 Descriptive Statistics Based on the results of data processing, the results of descriptive statistical analysis are obtained, as follows: Table 1
The following conclusions were reached as a consequence of the findings of the analysis and discussion that was conducted by the researchers: 1. In Indonesia, total bank assets have a statistically significant impact on the stability of Islamic banks
Summary
It is possible that financial inclusion will modify the structure of the system in terms of the transactions, services, and access points that are made available to the general public. On the other hand, financial inclusion can change the composition of the financial system in terms of transactions, services and access points available to the public which in turn will create new potential risks or shocks that tend to cause financial instability such as the collective failure of smaller institutions that can significantly can have a negative effect on stability in the financial system (Fauziah et al, 2020). Income diversification as an internal factor is carried out by Islamic Banks in an effort to maximize their performance so that their business stability is stronger. Based on research by Cihak and Hesse (2008), Wahid and Dar (2016), and Wibowo (2016) concluded that income diversification has a positive relationship with the stability of Islamic banks. Islamic banks often try to maintain their capital ratio above the required capital buffer. If the cost of capital in times of financial difficulty is low and the cost of getting fresh capital is high, the capital buffer can serve as a risk-absorber for a variety of problems that may occur
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