Analysis of the Effect of Financial Variables

Oct 13, 2025 by talynt.org 121 views

The Effect of Financial Variables on Mudharabah Deposit Sharing Returns in Sharia Banking in Indonesia (2011-2015)

Introduction

Islamic banking has become a significant player in the financial industry, particularly in Indonesia. One of the key features of Islamic banking is the concept of mudharabah, which is a profit-sharing arrangement between the bank and its depositors. The success of mudharabah deposit depends on various factors, including the bank's operational efficiency, risk management, capital adequacy, and financing strategies. This study aims to analyze the effect of net core operating margin, non-performing financing, capital adequacy ratio, and financing deposit ratio on the return of mudharabah deposit in Indonesian sharia banking in the period 2011 to 2015.

Methodology

This study uses annual data published by Bank Indonesia in Annual financial statements of Islamic banks as a source of information. To analyze data, multiple linear regression analysis tools are used. The study focuses on four financial variables: net core operating margin (NCOM), non-performing financing (NPF), capital adequacy ratio (CAR), and financing deposit ratio (FDR). The dependent variable is the return of mudharabah deposit.

Analysis of the Effect of Financial Variables

Net Core Operating Margin (NCOM)

NCOM is a measure of bank operational efficiency. Although it is an important indicator in bank performance appraisal, this study shows that NCOM has no significant influence on the return of mudharabah deposit. This could be caused by the unique characteristics of Islamic banking which is not fully dependent on operational margin to measure the performance expected by customers. Islamic banking focuses on the concept of profit-sharing, which is different from conventional banking that focuses on interest rates. Therefore, the operational efficiency of Islamic banks may not directly affect the return of mudharabah deposit.

Non-Performing Financing (NPF)

NPF indicates the level of financing that is not smooth. This study found that the NPF had a negative effect on the return of mudharabah deposit. That is, the higher the level of problem financing, the lower the return received by the Depository. This shows the importance of risk management in Islamic banking to maintain customer confidence. Islamic banks need to manage their risk effectively to ensure that the return of mudharabah deposit is not affected by non-performing financing.

Capital Adequacy Ratio (CAR)

CAR shows the adequacy of bank capital. Despite having an important role in financial stability, this study found that CAR had no significant effect on the return of mudharabah deposit. It could be, this is caused by the focus of Islamic banks which are more on other aspects, such as profitability, rather than just meets the capital provisions. Islamic banks may prioritize profitability over capital adequacy, which may not directly affect the return of mudharabah deposit.

Financing Deposit Ratio (FDR)

FDR measures how much financing is given compared to total deposits. The findings that the FDR has a positive effect on the return of mudharabah deposit revenue sharing shows that the higher the financing ratio, the greater the return that can be given to depositors. This reflects that Islamic banks need to try to maximize the use of funds received from customers. By increasing the financing deposit ratio, Islamic banks can increase the return of mudharabah deposit, which can benefit their customers.

Conclusion

Overall, the results of this study provide valuable insights on the factors that affect the return of Mudharabah deposit in the context of Islamic banking in Indonesia. By understanding the influential variables, Islamic bank management can be better in making strategic decisions to improve performance and provide better benefits for customers. This study also provides advice for further researchers to explore other factors that might affect the return of mudharabah deposit revenue returns, so as to provide a more comprehensive picture of the dynamics of Islamic banking in Indonesia.

Recommendations

Based on the findings of this study, the following recommendations are made:

Islamic banks should focus on managing their risk effectively to ensure that the return of mudharabah deposit is not affected by non-performing financing.
Islamic banks should prioritize profitability over capital adequacy to ensure that the return of mudharabah deposit is maximized.
Islamic banks should try to maximize the use of funds received from customers by increasing the financing deposit ratio.
Further research should be conducted to explore other factors that might affect the return of mudharabah deposit revenue returns.

Limitations

This study has several limitations. Firstly, the study only focuses on four financial variables, which may not be comprehensive. Secondly, the study only uses annual data, which may not capture the dynamics of Islamic banking in Indonesia. Finally, the study only focuses on the return of mudharabah deposit, which may not be the only factor that affects the performance of Islamic banks.

Future Research Directions

This study provides several directions for future research. Firstly, further research should be conducted to explore other factors that might affect the return of mudharabah deposit revenue returns. Secondly, the study should be replicated using more comprehensive data, such as quarterly or monthly data. Finally, the study should be extended to other countries to provide a more comprehensive picture of the dynamics of Islamic banking worldwide.
Frequently Asked Questions (FAQs) on the Effect of Financial Variables on Mudharabah Deposit Sharing Returns in Sharia Banking in Indonesia (2011-2015)

Q: What is mudharabah deposit in Islamic banking?

A: Mudharabah deposit is a profit-sharing arrangement between the bank and its depositors in Islamic banking. It is a type of deposit where the bank and the depositor share the profits and losses of the investment.

Q: What are the financial variables that affect the return of mudharabah deposit?

A: The financial variables that affect the return of mudharabah deposit are:

Net core operating margin (NCOM)
Non-performing financing (NPF)
Capital adequacy ratio (CAR)
Financing deposit ratio (FDR)

Q: What is the effect of NCOM on the return of mudharabah deposit?

A: The study found that NCOM has no significant influence on the return of mudharabah deposit. This is because Islamic banking focuses on the concept of profit-sharing, which is different from conventional banking that focuses on interest rates.

Q: What is the effect of NPF on the return of mudharabah deposit?

A: The study found that NPF has a negative effect on the return of mudharabah deposit. This is because non-performing financing can lead to a decrease in the return of mudharabah deposit.

Q: What is the effect of CAR on the return of mudharabah deposit?

A: The study found that CAR has no significant effect on the return of mudharabah deposit. This is because Islamic banks may prioritize profitability over capital adequacy.

Q: What is the effect of FDR on the return of mudharabah deposit?

A: The study found that FDR has a positive effect on the return of mudharabah deposit. This is because increasing the financing deposit ratio can lead to a higher return of mudharabah deposit.

Q: What are the implications of the study's findings for Islamic banks?

A: The study's findings have several implications for Islamic banks. Firstly, they should focus on managing their risk effectively to ensure that the return of mudharabah deposit is not affected by non-performing financing. Secondly, they should prioritize profitability over capital adequacy to ensure that the return of mudharabah deposit is maximized. Finally, they should try to maximize the use of funds received from customers by increasing the financing deposit ratio.

Q: What are the limitations of the study?

A: The study has several limitations. Firstly, it only focuses on four financial variables, which may not be comprehensive. Secondly, it only uses annual data, which may not capture the dynamics of Islamic banking in Indonesia. Finally, it only focuses on the return of mudharabah deposit, which may not be the only factor that affects the performance of Islamic banks.

Q: What are the future research directions based on the study's findings?

A: The study provides several directions for future research. Firstly, further research should be conducted to explore other factors that might affect the return of mudharabah deposit revenue returns. Secondly, the study should be replicated using more comprehensive data, such as quarterly or monthly data. Finally, the study should be extended to other countries to provide a more comprehensive picture of the dynamics of Islamic banking worldwide.

Q: What are the practical implications of the study's findings for policymakers and regulators?

A: The study's findings have several practical implications for policymakers and regulators. Firstly, they should consider the risk management practices of Islamic banks to ensure that the return of mudharabah deposit is not affected by non-performing financing. Secondly, they should prioritize the profitability of Islamic banks over capital adequacy to ensure that the return of mudharabah deposit is maximized. Finally, they should encourage Islamic banks to maximize the use of funds received from customers by increasing the financing deposit ratio.

Q: What are the future prospects of Islamic banking in Indonesia?

A: The study's findings suggest that Islamic banking in Indonesia has a promising future. With the increasing demand for Islamic financial products and services, Islamic banks in Indonesia are expected to continue to grow and expand their operations. However, they should focus on managing their risk effectively, prioritizing profitability, and maximizing the use of funds received from customers to ensure that the return of mudharabah deposit is maximized.