The effect of inflation, profit-loss sharing loan, and capital adequacy towards performance of Indonesian Islamic banks

*Luksi Visita scopus  -  Universitas Islam Negeri Walisongo, Indonesia
Received: 23 Sep 2019; Published: 16 Dec 2019.
Open Access Copyright 2019 Diponegoro International Journal of Business
License URL: http://creativecommons.org/licenses/by-sa/4.0

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Section: Articles
Language: EN
Statistics: 491 173
Abstract
The purpose of this study is to observe the impact of inflation, profit-loss sharing loan, and capital adequacy towards performance of Islamic banks in Indonesia. This study utilizes longitudinal study from 2010 to 2018 towards Islamic Commercial Banks and Sharia Business Units that are listed in Indonesia. Using pool-time series data, the variables studied are inflation, capital adequacy ratio (CAR), profit-loss sharing loan, and return on assets (ROA). The result shows that only inflation has no significant effect on performance. Capital adequacy affects positively significant, while profit-loss sharing loan affects negatively significant. This study add new perspective on how macroeconomic variable influence Islamic banks’ performance in Indonesia. Additionally, this study is also distinctive because of lengthier observation period (eight years) compared to other studies in recent five years
Keywords: Inflation; capital adequacy (CAR); profit-loss sharing loan; islamic banks’ performance; ROA

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