The Effect Of Murabaha, Mudharabah, Musyarakah, And Non -performance Financing (NPF) Receivables On Return On Assets (ROA) At Sharia Commercial Banks In Indonesia

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The Effect of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) Receivables on Return on Assets (ROA) at Sharia Commercial Banks in Indonesia

Introduction

In the realm of Islamic banking, understanding the impact of various financing components on Return on Assets (ROA) is crucial for effective management and maximizing returns. This study aims to examine the effect of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) receivables on ROA at Sharia Commercial Banks in Indonesia during the 2010-2013 period. The research focuses on 12 Islamic banks in Indonesia, with a sample of 8 banks selected using purposive sampling technique.

Methodology

The data used in this study were taken from the annual financial statements of Islamic banks for the 2010-2013 period. Multiple linear regression techniques were employed to analyze the data, with the aim of obtaining a comprehensive picture of the relationship between the variables studied. Additionally, a classic assumption test was carried out, including the normality test, heteroscedasticity test, autocorrelation test, and multicollinearity test.

Results

The results of this study showed that the variables of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) simultaneously had a significant influence on Return on Assets (ROA). However, when viewed partially, none of these variables had a significant effect on Islamic bank ROA in Indonesia. The predictive ability of the four variables to ROA was found to be 32.9%, while the remaining 67.1% was influenced by other factors not included in the research model.

Additional Analysis and Explanation

The effect of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) receivables on ROA is an important topic in the financial study of Islamic banks. ROA is an indicator used to measure how effective a bank is in generating profits from the total assets owned. In the context of Islamic banks, understanding of financing components such as Murabaha, Mudharabah, and Musyarakah is very important, as all three are the main principles in Islamic banking operations.

Murabaha: A Buying and Selling Transaction with a Clear Profit Margin

Murabaha is a buying and selling transaction with a clear profit margin, which tends to provide stability for banks. However, the high Murabahah receivables can be risky if not managed properly, especially if the customer has difficulty in payment. This can explain why partially, Murabahah does not show a significant effect on ROA.

Mudharabah and Musyarakah: Forms of Investment Requiring Expertise in Risk Management

Mudharabah and Musyarakah are forms of investment that require expertise in risk management. This can explain why partially, these two variables do not show a significant effect on ROA.

Non-Performing Financing (NPF): An Important Indicator in Assessing Bank Financial Health

Non-Performing Financing (NPF) is an important indicator in assessing bank financial health. The high NPF will negatively affect ROA, as it shows the risk of failure from the receivables owned. Although this research shows that the NPF has no statistically significant effect, in practice, good NPF management is very crucial to maintain the bank's performance.

Conclusion

The results of this study are expected to be a guide for Islamic bank management in managing financing portfolios and maximizing returns obtained from assets. Islamic banks need to pay attention to external factors that affect ROA to improve overall financial performance. Through better risk management and increasing effectiveness in operations, it is hoped that Islamic banks in Indonesia can be more optimal in managing assets and making greater contributions to the economy.

Recommendations

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

  1. Islamic banks should pay attention to external factors that affect ROA, such as market conditions, economic trends, and regulatory changes.
  2. Islamic banks should improve their risk management practices, including the management of Murabahah, Mudharabah, and Musyarakah receivables.
  3. Islamic banks should focus on increasing effectiveness in operations, including the optimization of asset management and the improvement of financial performance.

By implementing these recommendations, Islamic banks in Indonesia can improve their financial performance and make greater contributions to the economy.
Frequently Asked Questions (FAQs) on the Effect of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) Receivables on Return on Assets (ROA) at Sharia Commercial Banks in Indonesia

Q: What is the main objective of this study? A: The main objective of this study is to examine the effect of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) receivables on Return on Assets (ROA) at Sharia Commercial Banks in Indonesia during the 2010-2013 period.

Q: What is the population and sample of this study? A: The population of this study consists of 12 Islamic banks in Indonesia, while the sample consists of 8 banks selected using purposive sampling technique.

Q: What is the methodology used in this study? A: The data used in this study were taken from the annual financial statements of Islamic banks for the 2010-2013 period. Multiple linear regression techniques were employed to analyze the data, with the aim of obtaining a comprehensive picture of the relationship between the variables studied.

Q: What are the results of this study? A: The results of this study showed that the variables of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) simultaneously had a significant influence on Return on Assets (ROA). However, when viewed partially, none of these variables had a significant effect on Islamic bank ROA in Indonesia.

Q: What is the predictive ability of the four variables to ROA? A: The predictive ability of the four variables to ROA was found to be 32.9%, while the remaining 67.1% was influenced by other factors not included in the research model.

Q: What is the significance of this study? A: The results of this study are expected to be a guide for Islamic bank management in managing financing portfolios and maximizing returns obtained from assets. Islamic banks need to pay attention to external factors that affect ROA to improve overall financial performance.

Q: What are the recommendations of this study? A: Based on the findings of this study, the following recommendations are made:

  1. Islamic banks should pay attention to external factors that affect ROA, such as market conditions, economic trends, and regulatory changes.
  2. Islamic banks should improve their risk management practices, including the management of Murabahah, Mudharabah, and Musyarakah receivables.
  3. Islamic banks should focus on increasing effectiveness in operations, including the optimization of asset management and the improvement of financial performance.

Q: What are the limitations of this study? A: The limitations of this study include:

  1. The study only focuses on 12 Islamic banks in Indonesia, which may not be representative of all Islamic banks in the country.
  2. The study only uses data from the 2010-2013 period, which may not be representative of the current market conditions.
  3. The study only examines the effect of Murabaha, Mudharabah, Musyarakah, and Non-Performing Financing (NPF) receivables on ROA, which may not be the only factors affecting ROA.

Q: What are the future research directions? A: The future research directions include:

  1. Examining the effect of other financing components on ROA, such as Ijarah and Istisna'.
  2. Examining the effect of other factors on ROA, such as market conditions, economic trends, and regulatory changes.
  3. Examining the effect of ROA on other financial performance indicators, such as Return on Equity (ROE) and Net Interest Margin (NIM).