The Impact of Liquidity Risk and Credit Risk on the Profitability of General Sharia Banks in Indonesia

Zahra Ramdhonah, Rini Kurniawati, Amir Machmud

2017

Abstract

The purpose of this research is to analyze the influence of liquidity risk and credit risk on the profitability level of General Sharia Banks in Indonesia. Liquidity risk in this study is measured by Financing to Deposit Ratio (FDR), credit risk in is measured by Non Performing Financing (NPF) and profitability is measured by Return on Equity (ROE). The research method in this study is an explanatory research. The data were collected from the sharia banking statistics issued by the Financial Services Authority of Indonesia. We used time series data of 12 General Sharia Banks in Indonesia from the first quarter until the fourth quarter of 2014 until 2016. The data were then analyzed by using multiple linear regression analysis. The result of the study shows that the level of profitability of General Sharia Banks in Indonesia is 24% influenced by the level of liquidity risk (FDR) and credit risk (NPF). The remaining 76% is influenced by other variables not analyzed in this research. Liquidity risk (FDR) and credit risk (NPF) have a significant negative effect on the profitability level (ROE) of General Sharia Banks in Indonesia.

Paper Citation

in Harvard Style

Ramdhonah Z., Kurniawati R. and Machmud A. (2017). The Impact of Liquidity Risk and Credit Risk on the Profitability of General Sharia Banks in Indonesia.In Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship - Volume 1: ICEEE, ISBN 978-989-758-308-7, pages 799-804. DOI: 10.5220/0006893707990804

in Bibtex Style

@conference{iceee17,
author={Zahra Ramdhonah and Rini Kurniawati and Amir Machmud},
title={The Impact of Liquidity Risk and Credit Risk on the Profitability of General Sharia Banks in Indonesia},
booktitle={Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship - Volume 1: ICEEE,},
year={2017},
pages={799-804},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0006893707990804},
isbn={978-989-758-308-7},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship - Volume 1: ICEEE,
TI - The Impact of Liquidity Risk and Credit Risk on the Profitability of General Sharia Banks in Indonesia
SN - 978-989-758-308-7
AU - Ramdhonah Z.
AU - Kurniawati R.
AU - Machmud A.
PY - 2017
SP - 799
EP - 804
DO - 10.5220/0006893707990804