THE IMPACT OF RISK AND REPUTATION ON FINANCIAL PERFORMANCE IN ISLAMIC BANKING: EVIDANCE FROM INDONESIA

Falikhatun Falikhatun, Mutiarafah Mutiarafah

Abstract


This study aims to examine the impact of risk and reputation on financial performance. More specifically, we use financing risk, liquidity risk, reputation with rewards, and growth in profit-sharing based financing as our variable of interests. We also assign bank size as a control variable. Our data is analyzed using Generalized Least Square (GLS) regression. Islamic Commercial Banks listed in Sharia Banking Statistics (Statistik Perbankan Syariah - SPS) published by OJK in 2015−2019 are selected as our sample. We find that (1) financing risk has a negative effect on financial performance; and (2) both reputation with rewards and bank size have a positive effect on financial performance. However, liquidity risk and growth in profit-sharing based financing do not affect financial performance. Several research implications are the importance of risk mitigation, the importance to maintain the reputation of the Islamic bank’s stakeholders, and creating innovative funding and financing products.


Keywords


bank size, financial performance; levels of risk; reputation

Full Text:

PDF

References


Abimayu, R., Mukhzarudfa, & Lubis, T. A. (2019). Analisis Determinan Pengungkapan Islamic Social Reporting (ISR) di Perusahaan yang Terdaftar di Jakarta Islamic Index (JII). Jurnal Akuntansi & Keuangan Unja, 4(1), 24−33.

Adib, N., & Khalid, S. (2010). Performance Measurement System in Islamic Bank: Some Issues and Considerations. Jurnal Akuntansi Multiparadigma, 1(3), 448−456. http://dx.doi.org/10.18202/jamal.2010.12.7104.

Agustiningsih, S., Sulistyaningsih, C., & Purwanto, P. (2016). Pengaruh Penerapan Corporate Governance terhadap Kinerja Keuangan Perusahaan di Indonesia. Jurnal Akuntansi dan Bisnis, 16(1), 27-36. http://dx.doi.org/10.20961/jab.v16i1.188.

Auge-Dickhut, S., Koye, B., & Liebetrau, A. (2016). The Zurich Model of Customer-Centricity. In Customer Value Generation in Banking: The Zurich Model of Customer-Centricity (pp. 183–195). Springer International Publishing. https://doi.org/10.1007/978-3-319-19938-2_10.

Budihariyanto, B., Afifudin, A., & Junaidi, J. (2018). Pengaruh Pembiayaan (Bagi Hasil dan Jual Beli), Financing to Deposit Ratio (FDR), dan Non Performing Financing (NPF) terhadap Profitabilitas Bank Non Devisa Syariah (Tahun Penelitian 2015-2017). Jurnal Ilmiah Riset Akuntansi, 7(04), 15−25.

Dahmash, F. N. (2015). Size Effect on Company Profitability: Evidence from Jordan. International Journal of Business and Management, 10(2), 5872. http://dx.doi.org/10.5539/ijbm.v10n2p58.

Freeman, R. E. (2015). Stakeholder Theory. Wiley Encyclopedia of Management, 1–6. https://doi.org/10.1002/9781118785317.weom020179.

Ganiyy, A., Fattah, A., Ogunbado, A. F., & Ahmad, N. H. (2017). Islamic Perspectives on Liquidity Risk Management Practices of Islamic Banks in Malaysia and Bahrain. Asian Journal of Multidisciplinary Studies, 5(1), 100-108.

Haris, M., Yao, H., Tariq, G., Malik, A., & Javaid, H. (2019). Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan. Journal of Risk and Financial Management, 12(2), 56. https://doi.org/10.3390/jrfm12020056

Harisa, E., Adam, M., & Meutia, I. (2019). Effect of Quality of Good Corporate Governance Disclosure, Leverage and Firm Size on Profitability of Isalmic Commercial Banks. International Journal of Economics and Financial Issues, 9(4), 189–196. https://doi.org/10.32479/ijefi.8157

Inayatillah, Y., & Subardjo, A. (2017). Pengaruh Pembiayaan Bagi Hasil, Jual Beli, FDR, NPF terhadap Profitabilitas Bank Syariah. Jurnal Ilmu dan Riset Akuntansi (JIRA), 6(12), 1−17.

Iqbal, M., & Molyneux, P. (2016). Thirty Years of Islamic Banking: History, Performance and Prospects. New York: Palgrave Macmillan. https://doi.org/10.1007/978-0-230-50322_9.

Idris, R., Fizari Abu Hassan Asari, F., Asilah Abdullah Taufik, N., Jana Salim, N., Mustaffa, R., & Jusoff, K. (2011). Determinant of Islamic Banking Institutions’ Profitability in Malaysia. World Applied Sciences JournalSpecial Issue on Bolstering Economic Sustainability Bank Negara Malaysia, 12(1), 1–7. http://www.bnm.gov.my/microsites/financial/0204_ib_takaful.htm#ib

Iqbal, Z., & Mirakhor, A. (2017). Ethical Dimensions of Islamic Economics and Finance. Ethical Dimensions of Islamic Finance, 103–134. https://doi.org/10.1007/978-3-319-66390-6_5.

Krisnawati, Y., Erlina, & Fachrudin, K. A. (2019). The Effect of Islamic Corporate Social Responsibility, Shariah Compliance, Firm Size and Sharia Supervisory Board on Profitability of Sharia Commercial Banks in Indonesia. International Journal of Public Budgeting, Accounting and Finance, 2(2), 1–14. http://ijpbaf.org/index.php/ijpbaf/article/view/169

Lusambo, L. J. (2017). On The Two-Way Relationship between Corporate Reputation and Financial Performance in Microfinance: A Stakeholder Approach. International Journal of Business and Management, 12(11), 149−163. https://doi.org/10.5539/ijbm.v12n11p149.

Makhdalena, M. (2018). Pengaruh Blockholders Ownership, Firm Size, dan Leverage terhadap Kinerja Keuangan Perusahaan. EKUITAS (Jurnal Ekonomi dan Keuangan), 18(3), 277−292. http://dx.doi.org/10.24034/j25485024.y2014.v18.i3.136

Masrur, A. D., Widarwati, E., & Ramdan, D. (2019). The Influence of Credit Risk and Liquidity Risk on Performance of Sharia Commercial Banks in 2010-2015. DIMENSIA (Diskursus Ilmu Manajemen STIESA), 16(2), 5−5.

Meutia, I., & Febrianti, D. (2017). Islamic Social Reporting in Islamic Banking: Stakeholders Theory Perspective. SHS Web of Conferences, 34, 20−22. http://doi.org/10.1051/shsconf/20173412001.

Meyrantika, D. N., & Haryanto, A. M. (2017). Analisis Permodalan, Penyaluran Dana, Diversifikasi Pendapatan, NIM dan Risiko Kredit terhadap Kinerja Keungan Perbankan (Studi Empiris BUSN yang terdaftar Di BEI Periode 2012−2015). Diponegoro Journal of Management, 6(3), 187-199.

Nuha, V. Q. Q., & Mulazid, A. S. (2018). Pengaruh NPF, BOPO, dan Pembiayaan Bagi Hasil terhadap Profitabilitas Bank Umum Syariah di Indonesia. Al-Uqud: Journal of Islamic Economics, 2(2), 168−182. http://dx.doi.org/10.26740/al-uqud.v2n2.p168-182

Ongore, V. O., & Kusa, G. B. (2013). Determinants of Financial Performance of Commercial Banks in Kenya. International Journal of Economics and Financial Issues, 3(1), 237-252.

Puncheva‐Michelotti, P., & Michelotti, M. (2010). The Role of the Stakeholder Perspective in Measuring Corporate Reputation. Marketing Intelligence & Planning, 28(3), 249–274. https://doi.org/10.1108/02634501011041417.

Rafsanjani, H. (2016). Pengaruh Internal Capital Adequency Ratio (CAR), Financing to Deposit Ratio (FDR), dan Biaya Operasional per Pendapatan Operasional (BOPO) dalam Peningkatan Profitabilitas Industri Bank Syariah di Indonesia. Jurnal Masharif al-Syariah: Jurnal Ekonomi dan Perbankan Syariah, 1(1) 60-74. http://dx.doi.org/10.30651/jms.v1i1.416.

Ravindy, S., Laila, N., Rani, L. N., & Sukmaningrum, P. S. (2019). The Influence of Bank Ownership on Bank Performance and Risks (The Case of Sharia Commercial Banks in Indonesia). KnE Social Sciences, 376-388. http://dx.doi.org/10.18502/kss.v3i13.4217.

Sabrina, F. N., & Muharam, H. (2015). Analisis Pengaruh Kepemilikan Pemerintah, Kepemilikan Asing, Risiko Likuiditas dan Risiko Kredit terhadap Kinerja Keuangan Bank. Diponegoro Journal of Management, 224−236.

Sheefeni, J. P., & Nyambe, J. M. (2016). Macroeconomic Determinants of Commercial Banks’ Liquidity in Namibia. European Journal of Business, Economics and Accountancy, 4(5), 19−30.

Solikhin, A. & Lubis, T. A. (2019). Kinerja Perusahaan: Tinjauan Reputasi Perusahaan dan CSR. Jambi: Salim Media Indonesia.

Supiyadi, D., Arief, M., & Nugraha, N. (2019). The Determinants of Bank Profitability: Empirical evidence from Indonesian Sharia Banking Sector. 1st International Conference on Economics, Business, Entrepreneurship, and Finance (ICEBEF 2018). Atlantis Press. https://dx.doi.org/10.2991/icebef-18.2019.6

Trad, N., Trabelsi, M. A., & Goux, J. F. (2017). Risk and profitability of Islamic Banks: A Religious Deception or An Alternative Solution? European Research on Management and Business Economics, 23(1), 40–45. https://doi.org/10.1016/j.iedeen.2016.09.001.

Trotta, A., Iannuzzi, A. P., & Pacelli, V. (2016). Reputation, Reputational Risk and Reputational Crisis in the Banking Industry: State of the Art and Concepts for Improvements. In Managing Reputation in the Banking Industry, 3−32. Springer, Cham. https://doi.org/10.1007/978-3-319-28256-5_1.

Ulina, S., & Abd Majid, M. S. (2020). A Comparative Analysis of Determinants of Islamic and Conventional Banking Performances in Indonesia. Amwaluna: Jurnal Ekonomi dan Keuangan Syariah, 4(2) 176−192. https://doi.org/10.29313/amwaluna.v4i2.5819.

Weng, P. S., & Chen, W. Y. (2017). Doing Good or Choosing Well? Corporate Reputation, CEO Reputation, and Corporate Financial Performance. The North American Journal of Economics and Finance, 39, 223−240. https://doi.org/10.1016/j.najef.2016.10.008.




DOI: https://doi.org/10.29313/amwaluna.v5i2.7033

Refbacks

  • There are currently no refbacks.


Editorial Office:

Syariah Faculty, Universitas Islam Bandung

Jalan Ranggagading No. 8 Bandung

Creative Commons License

Amwaluna : Jurnal Ekonomi dan Keuangan Syariah is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

View My Stats