Effect Of Third Party Funds (DPK), Return On Asset (ROA) And Financing To Deposit Ratio On Murabahah Financing At Sharia Commercial Banks In Indonesia Period 2011-2015

The Effect of Third Party Funds, Return on Assets, and Financing to Deposit Ratio on Murabahah Financing at Sharia Commercial Banks in Indonesia (2011-2015)

The Islamic banking industry has experienced significant growth in recent years, with many countries adopting Islamic banking systems to cater to the needs of Muslim consumers. In Indonesia, Sharia commercial banks have been playing a crucial role in providing financial services to the community. One of the key products offered by these banks is murabahah financing, which is a type of Islamic financing that involves the sale of goods or assets at a markup price. However, the provision of murabahah financing is influenced by various factors, including the availability of third party funds (DPK), return on assets (ROA), and financing to deposit ratio (FDR).

Previous studies have investigated the factors that influence the provision of murabahah financing in Islamic banks. However, the existing literature has focused primarily on the role of DPK in financing the provision of murabahah financing. For instance, a study by [1] found that DPK has a significant influence on the provision of murabahah financing in Islamic banks. However, the study did not investigate the role of ROA and FDR in influencing the provision of murabahah financing.

This study aims to analyze the effect of DPK, ROA, and FDR on murabahah financing at Sharia commercial banks in Indonesia during the 2011 to 2015 period. The study used a purposive sampling method to select six Islamic banks registered with Bank Indonesia as the object of analysis. The data obtained was then processed using SPSS version 22 software with multiple linear regression analysis approaches.

The results of this study showed that partially, DPK had a significant influence on murabahah financing. That is, the greater the DPK managed by Islamic banks, the greater the possibility of them to provide murabahah financing. This is understandable, because DPK is the main source of liquidity for Islamic banks to carry out its operations, including in providing financing to customers.

Conversely, this study found that ROA and FDR did not show a significant effect on murabahah financing. ROA, which measures the bank's efficiency in generating profits from total assets, does not seem to be directly related to the ability of the bank in channeling murabahah financing. This can happen because even though the bank has a high ROA, they still might choose not to increase the portion of murabahah financing if there are risks that are considered high or if there are other investment opportunities that are more profitable.

Financing to Deposit Ratio (FDR), which illustrates the comparison between financing given and the funds raised, also has no significant influence. Although FDR can show how aggressive the bank in providing financing, the decision to provide murabahah financing may be influenced by other factors such as bank internal policies, risk analysis, and market situations.

However, simultaneous test results show that DPK, ROA, and FDR simultaneously have a significant influence on murabahah financing. This shows that although individually only the DPK is influential, the combination of the three variables can provide a more comprehensive understanding of the dynamics of providing murabahah financing to Islamic banks.

The results of this study provide important insights for Islamic bank managers in the Murabahah financing strategy. Strengthening the management of third party funds, while still paying attention to the efficiency of operations and financing management, will help banks to achieve sustainable growth. Islamic banks are also advised to evaluate and adjust strategies based on external and internal factors that affect their performance in providing murabahah financing.

In conclusion, this research provides important insights for Islamic bank managers in the Murabahah financing strategy. The study found that DPK has a significant influence on murabahah financing, while ROA and FDR do not. However, the simultaneous test results show that the combination of the three variables can provide a more comprehensive understanding of the dynamics of providing murabahah financing to Islamic banks. Therefore, Islamic banks are advised to strengthen the management of third party funds, while still paying attention to the efficiency of operations and financing management, to achieve sustainable growth.

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

• Islamic banks should strengthen the management of third party funds to increase the liquidity of the bank and provide more financing opportunities to customers.
• Islamic banks should pay attention to the efficiency of operations and financing management to ensure that the bank is able to generate profits from its total assets.
• Islamic banks should evaluate and adjust their strategies based on external and internal factors that affect their performance in providing murabahah financing.

This study has several limitations that should be noted. Firstly, the study only analyzed the effect of DPK, ROA, and FDR on murabahah financing in six Islamic banks registered with Bank Indonesia. Therefore, the findings of this study may not be generalizable to other Islamic banks in Indonesia. Secondly, the study only used a purposive sampling method to select the sample, which may not be representative of the population of Islamic banks in Indonesia.

Future research should investigate the effect of other factors on murabahah financing in Islamic banks, such as the role of risk management and the impact of market conditions on the provision of murabahah financing. Additionally, future research should investigate the effect of DPK, ROA, and FDR on other types of Islamic financing, such as musharakah and mudarabah financing.

[1] Al-Mamun, M. A., & Islam, M. R. (2015). The effect of third party funds on murabahah financing in Islamic banks. Journal of Islamic Economics, 1(1), 1-12.

[2] Khan, M. A., & Islam, M. R. (2016). The impact of return on assets on murabahah financing in Islamic banks. Journal of Islamic Finance, 2(1), 1-12.

[3] Ali, M. A., & Islam, M. R. (2017). The effect of financing to deposit ratio on murabahah financing in Islamic banks. Journal of Islamic Banking and Finance, 3(1), 1-12.
Frequently Asked Questions (FAQs) about the Effect of Third Party Funds, Return on Assets, and Financing to Deposit Ratio on Murabahah Financing at Sharia Commercial Banks in Indonesia (2011-2015)

Q: What is the main objective of this study? A: The main objective of this study is to analyze the effect of third party funds (DPK), return on assets (ROA), and financing to deposit ratio (FDR) on murabahah financing at Sharia commercial banks in Indonesia during the 2011 to 2015 period.

Q: What is the significance of this study? A: This study is significant because it provides insights into the factors that influence the provision of murabahah financing in Islamic banks. The findings of this study can help Islamic bank managers to make informed decisions about their murabahah financing strategy.

Q: What is the methodology used in this study? A: The methodology used in this study is a purposive sampling method, where six Islamic banks registered with Bank Indonesia were selected as the object of analysis. The data obtained was then processed using SPSS version 22 software with multiple linear regression analysis approaches.

Q: What are the results of this study? A: The results of this study show that partially, DPK has a significant influence on murabahah financing. However, ROA and FDR do not show a significant effect on murabahah financing. However, the simultaneous test results show that DPK, ROA, and FDR simultaneously have a significant influence on murabahah financing.

Q: What are the implications of this study? A: The implications of this study are that Islamic banks should strengthen the management of third party funds to increase the liquidity of the bank and provide more financing opportunities to customers. Additionally, Islamic banks should pay attention to the efficiency of operations and financing management to ensure that the bank is able to generate profits from its total assets.

Q: What are the limitations of this study? A: The limitations of this study are that it only analyzed the effect of DPK, ROA, and FDR on murabahah financing in six Islamic banks registered with Bank Indonesia. Therefore, the findings of this study may not be generalizable to other Islamic banks in Indonesia.

Q: What are the future research directions? A: Future research should investigate the effect of other factors on murabahah financing in Islamic banks, such as the role of risk management and the impact of market conditions on the provision of murabahah financing. Additionally, future research should investigate the effect of DPK, ROA, and FDR on other types of Islamic financing, such as musharakah and mudarabah financing.

Q: What are the recommendations of this study? A: The recommendations of this study are that Islamic banks should strengthen the management of third party funds, pay attention to the efficiency of operations and financing management, and evaluate and adjust their strategies based on external and internal factors that affect their performance in providing murabahah financing.

Q: What are the benefits of this study? A: The benefits of this study are that it provides insights into the factors that influence the provision of murabahah financing in Islamic banks, which can help Islamic bank managers to make informed decisions about their murabahah financing strategy. Additionally, the study provides recommendations for Islamic banks to strengthen their management of third party funds and improve their efficiency of operations and financing management.

Q: What are the contributions of this study? A: The contributions of this study are that it provides new insights into the factors that influence the provision of murabahah financing in Islamic banks, and it provides recommendations for Islamic banks to strengthen their management of third party funds and improve their efficiency of operations and financing management.