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Sharia financing products and the performance of sharia commercial banks – the evidence from Indonesia

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  • Veni Soraya Dewi

    (Universitas Muhammadiyah Magelang, Indonesia)

Abstract

This study aims to examine whether the financing products in sharia commercial banks will affect financial performance if moderated by NPF. The analytical method used in this study is MRA based on data obtained from audited annual reports of each sharia commercial bank in Indonesia in 2014–2018. The results showed that mudarabah, musyarakah, and ijarah had a positive effect on financial performance, while murabahah had no effect. NPF as a moderating variable is proven to be able to weaken the effect of mudaraba and ijarah, strengthen murabahah, but doesn’t moderate the effect of musyarakah. The implication is that it can be used as a basis for determining policy procedures and standards for lending, especially in mudarabah and ijarah. However, in murabahah NPF is actually beneficial because the assets will be returned to the bank if the customer is unable to repay the loan during the period specified in the contract.

Suggested Citation

  • Veni Soraya Dewi, 2022. "Sharia financing products and the performance of sharia commercial banks – the evidence from Indonesia," Bank i Kredyt, Narodowy Bank Polski, vol. 53(5), pages 497-522.
    • Handle: RePEc:nbp:nbpbik:v:53:y:2022:i:5:p:497-522
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    File URL: https://bankikredyt.nbp.pl/content/2022/05/bik_05_2022_03.pdf
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    References listed on IDEAS

    as
    1. Muhammad Yusuf & Surachman Surjaatmadja, 2018. "Analysis of Financial Performance on Profitability with Non Performace Financing As Variable Moderation," International Journal of Economics and Financial Issues, Econjournals, vol. 8(4), pages 126-132.
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    More about this item

    Keywords

    sharia financing products; non-performing financing; financial performance; Islamicity Performance Indexes; sharia commercial banks;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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