Abstract
This study aims to examine and analyze the relationship between the effect of operating costs and operating income on bank performance which is mediated by credit risk. Using data on Islamic banking companies listed on the IDX in 2012-2019. The methodology in this study uses secondary data. Data specification is panel data (pooled data) which is actually a combination of data consisting of time series data and cross-sectional data. The analysis tool used is SEM-PLS with the WarpPLS 7.0 application. The results of this study indicate that credit risk can partially mediate the effect of operating costs and operating income on bank performance. This research is successful in proving that the operational cost ratio is used to measure the level of efficiency and ability of a bank in conducting its operations. The smaller this ratio means the more efficient the operational costs borne by the bank concerned so that the possibility of a bank in a less problematic condition. The smaller this ratio, the better the bank's performance.
Highlights
The global financial crisis in 2008 was one of the forms of the fragility of the financial system
This study aims to examine and analyze the relationship between the effect of operating costs and operating income on bank performance which is mediated by credit risk
Based on the results of credit risk research in this study states that credit risk proxied by Noan Performing Financing (NPF) can partially mediate the relationship between the effect of operating costs and operating income on bank performance, BOPO is the ratio between operating expenses and operating income
Summary
The global financial crisis in 2008 was one of the forms of the fragility of the financial system. The global financial crisis originated in the United States, which was caused by defaults of subprime customers on loans with slowly increasing interest rates, which initially used low interest rates This default has an impact on creditor banks that make credit investments by using loans from other banks using securities instruments. The resilience of Islamic banks is in the health aspect of the bank, and in the component of sources of funds that do not have loans in foreign currency even though they have sources of funds from customers in the form of foreign currency with a comparable amount that can still be guaranteed with sufficient capital, given the impact of the global financial crisis is large amounts of withdrawal of investment funds in foreign currency and depreciation of the rupiah exchange rate against foreign currencies, especially the United States Dollar. Islamic banks are expected to be able to make an attractive Islamic product for investors and customers to be able to make investments that are relatively safe in the event of financial turmoil and gain customer loyalty so that they can increase asset growth through sources of funds and the capital component of high profitability
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