Credit Risk Management and Islamic Banking Performance - Evidence from Indonesia

Dedi Supiyadi, Deddy Mulyadi, Merry Fithriani, Syaiful Syaiful, Zulfikar Ikhsan, Luthfi Rahman

Abstract

The growth of Islamic banking in Indonesia plays an important role for the economic growth, the growth of Islamic banking itself is inseparable from the credit risk that determines the performance of the banking as a whole. This study aims to determine the credit risk and performance of Islamic banking in Indonesia that are listed in Indonesian Stock Exchange in 2007 – 2016. We use the secondary data obtained from the Indonesian Stock Exchange and the annual reports and then we analyses the data by using multiple linear regressions. The result of the study shows that performance of Islamic banks in Indonesia is influenced by Credit Risk, Capital Adequacy Ratio, Company Size and Liquidity Risk. The study finds that credit risk and liquidity risk have a positive effect while Capital Adequacy and firm size have a negative effect. Furthermore, the study finds that inflation has insignificant effect on performance of Islamic banking in Indonesia. Based on the studies, Islamic banks should increase the capital adequacy, and increase the company's assets through the bond, increase the number of shares or other forms of financing. The need for external and internal monitoring of debtor. Internal control is conducted by conducting intensive control over the process of disbursement of credit funds. While the external control is done by monitoring and action the use of credit funds effectively and efficiently by Islamic banking to customers. With the two aspects of control is expected to reduce the credit risk of Islamic banking.

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Paper Citation


in Harvard Style

Supiyadi D., Mulyadi D., Fithriani M., Syaiful S., Ikhsan Z. and Rahman L. (2017). Credit Risk Management and Islamic Banking Performance - Evidence from Indonesia.In 1st International Conference on Islamic Economics, Business, and Philanthropy - Volume 1: ICIEBP, ISBN 978-989-758-315-5, pages 193-199. DOI: 10.5220/0007079201930199


in Bibtex Style

@conference{iciebp17,
author={Dedi Supiyadi and Deddy Mulyadi and Merry Fithriani and Syaiful Syaiful and Zulfikar Ikhsan and Luthfi Rahman},
title={Credit Risk Management and Islamic Banking Performance - Evidence from Indonesia},
booktitle={1st International Conference on Islamic Economics, Business, and Philanthropy - Volume 1: ICIEBP,},
year={2017},
pages={193-199},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0007079201930199},
isbn={978-989-758-315-5},
}


in EndNote Style

TY - CONF

JO - 1st International Conference on Islamic Economics, Business, and Philanthropy - Volume 1: ICIEBP,
TI - Credit Risk Management and Islamic Banking Performance - Evidence from Indonesia
SN - 978-989-758-315-5
AU - Supiyadi D.
AU - Mulyadi D.
AU - Fithriani M.
AU - Syaiful S.
AU - Ikhsan Z.
AU - Rahman L.
PY - 2017
SP - 193
EP - 199
DO - 10.5220/0007079201930199