Investigating the Impact of Other Financing Methods

Oct 13, 2025 by talynt.org 14 views

The Influence of Murabaha, Mudharabah, Musyarakah, and Capital Adequacy Ratio Financing on the Profitability of Sharia Commercial Banks in Indonesia with Non-Performance Financing Ratio as a Moderating Variable

Introduction

In the rapidly growing Islamic banking industry, understanding the impact of various financing methods and financial ratios on bank profitability is crucial for stakeholders to make informed decisions. Sharia commercial banks in Indonesia, in particular, have been expanding their services and products to cater to the increasing demand for Islamic banking services. This study aims to investigate the effect of Murabaha, Mudharabah, Musyarakah, and Capital Adequacy Ratio financing on the profitability of sharia commercial banks in Indonesia, with Non-Performance Financing (NPF) ratio as a moderating variable.

Background

Islamic banking, also known as Sharia banking, operates based on the principles of Sharia law, which prohibits the collection and payment of interest (riba). Instead, Islamic banks use various financing methods, such as Murabaha, Mudharabah, and Musyarakah, to provide financial services to their customers. These financing methods are designed to be more equitable and risk-sharing, as they involve the sharing of profits and losses between the bank and the customer.

Research Methods

This study employed a quantitative approach, using a sample of 13 sharia commercial banks in Indonesia, with data collected from 2008 to 2017. The selection of samples was carried out using the saturated sample method, which included the entire population. Multiple regression and moderating regression analysis were used to analyze the data.

Main Findings

The results of this study showed that:

Murabaha Financing: Murabaha financing has a positive and significant influence on bank profitability. This indicates that the higher the level of murabaha financing, the better the profitability produced. Murabaha financing is a type of financing where the bank purchases goods or services from a supplier and then sells them to the customer at a markup. This type of financing is widely used in Islamic banking and is considered to be a low-risk financing method.
Mudharabah Financing: Although mudharabah financing shows a positive influence, the impact on profitability is not significant. This indicates that despite the potential benefits of mudharabah, other factors may also affect the results. Mudharabah financing is a type of financing where the bank and the customer share the profits and losses of a business venture.
Musyarakah Financing: Musyarakah financing shows an insignificant negative effect on profitability. This could be caused by a higher risk associated with this type of financing or less effective management. Musyarakah financing is a type of financing where the bank and the customer share the ownership and profits of a business venture.
Capital Adequacy Ratio: This study found that banks with more sufficient capital tend to have better performance in terms of profitability. The capital adequacy ratio is a measure of a bank's capital to its risk-weighted assets. A higher capital adequacy ratio indicates that a bank has more capital to absorb potential losses.

Non-Performing Financing Role

In terms of moderating variables, this study found that non-performance financing did not have a significant effect as a moderating variable between murabaha, mudharabah, and musyarakah financing on profitability. This indicates that although there is an NPF, the influence of the three types of financing is still not affected by the existence of problem loans.

However, what is interesting is that non-performance financing has a significant influence as a moderating variable between the capital adequacy ratio on profitability. This shows that the capital adequacy ratio is more influential in the NPF context, which can mean that good risk management in dealing with NPF can increase bank profitability.

Conclusion

From the results of this study, it can be concluded that the financing of murabaha and capital adequacy ratio is very important in increasing the profitability of sharia commercial banks in Indonesia. Meanwhile, mudharabah and musyarakah financing, despite having a positive impact, shows its own challenges in the context of profitability. The non-performance financing variable also plays an important role in the moderating context, especially related to the capital adequacy ratio. This study provides valuable insights for stakeholders in the Islamic banking industry, in order to make better decisions in managing financing and risks.

Implications

This study has several implications for stakeholders in the Islamic banking industry:

Murabaha Financing: Sharia commercial banks in Indonesia should continue to use murabaha financing as a key strategy to increase profitability.
Capital Adequacy Ratio: Banks should maintain a high capital adequacy ratio to ensure that they have sufficient capital to absorb potential losses.
Risk Management: Banks should implement effective risk management strategies to deal with non-performance financing.
Product Diversification: Banks should diversify their product offerings to cater to the increasing demand for Islamic banking services.

Limitations

This study has several limitations:

Sample Size: The sample size of 13 sharia commercial banks in Indonesia may not be representative of the entire industry.
Data Availability: The data used in this study may not be comprehensive, as some banks may not have reported their financial data.
Methodology: The use of multiple regression and moderating regression analysis may not be the most appropriate methodology for this study.

Future Research Directions

This study has several future research directions:

Investigating the Impact of Other Financing Methods: Future studies should investigate the impact of other financing methods, such as Ijara and Istisna, on bank profitability.
Examining the Role of Other Moderating Variables: Future studies should examine the role of other moderating variables, such as the bank's size and age, on the relationship between financing methods and profitability.
Investigating the Impact of Regulatory Changes: Future studies should investigate the impact of regulatory changes on the profitability of sharia commercial banks in Indonesia.
Q&A: The Influence of Murabaha, Mudharabah, Musyarakah, and Capital Adequacy Ratio Financing on the Profitability of Sharia Commercial Banks in Indonesia

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of Murabaha, Mudharabah, Musyarakah, and Capital Adequacy Ratio financing on the profitability of sharia commercial banks in Indonesia, with Non-Performance Financing (NPF) ratio as a moderating variable.

Q: What are the key findings of this study?

A: The key findings of this study are:

Murabaha financing has a positive and significant influence on bank profitability.
Mudharabah financing shows a positive influence, but the impact on profitability is not significant.
Musyarakah financing shows an insignificant negative effect on profitability.
Banks with more sufficient capital tend to have better performance in terms of profitability.
Non-performance financing does not have a significant effect as a moderating variable between murabaha, mudharabah, and musyarakah financing on profitability.
Non-performance financing has a significant influence as a moderating variable between the capital adequacy ratio on profitability.

Q: What are the implications of this study for stakeholders in the Islamic banking industry?

A: The implications of this study for stakeholders in the Islamic banking industry are:

Sharia commercial banks in Indonesia should continue to use murabaha financing as a key strategy to increase profitability.
Banks should maintain a high capital adequacy ratio to ensure that they have sufficient capital to absorb potential losses.
Banks should implement effective risk management strategies to deal with non-performance financing.
Banks should diversify their product offerings to cater to the increasing demand for Islamic banking services.

Q: What are the limitations of this study?

A: The limitations of this study are:

The sample size of 13 sharia commercial banks in Indonesia may not be representative of the entire industry.
The data used in this study may not be comprehensive, as some banks may not have reported their financial data.
The use of multiple regression and moderating regression analysis may not be the most appropriate methodology for this study.

Q: What are the future research directions based on this study?

A: The future research directions based on this study are:

Investigating the impact of other financing methods, such as Ijara and Istisna, on bank profitability.
Examining the role of other moderating variables, such as the bank's size and age, on the relationship between financing methods and profitability.
Investigating the impact of regulatory changes on the profitability of sharia commercial banks in Indonesia.

Q: What are the practical implications of this study for Islamic banking practitioners?

A: The practical implications of this study for Islamic banking practitioners are:

To continue using murabaha financing as a key strategy to increase profitability.
To maintain a high capital adequacy ratio to ensure that they have sufficient capital to absorb potential losses.
To implement effective risk management strategies to deal with non-performance financing.
To diversify their product offerings to cater to the increasing demand for Islamic banking services.

Q: What are the theoretical implications of this study for Islamic banking research?

A: The theoretical implications of this study for Islamic banking research are:

To provide a better understanding of the impact of different financing methods on bank profitability.
To contribute to the development of a more comprehensive framework for Islamic banking research.
To provide a basis for further research on the impact of regulatory changes on the profitability of sharia commercial banks in Indonesia.

Q: What are the policy implications of this study for regulatory bodies?

A: The policy implications of this study for regulatory bodies are:

To review and revise the existing regulatory framework for Islamic banking in Indonesia to ensure that it is more effective in promoting the growth and stability of the industry.
To provide more support and guidance to Islamic banks in Indonesia to help them implement effective risk management strategies.
To promote the development of a more comprehensive framework for Islamic banking research in Indonesia.