Assessing the Profitability of Islamic Banks: The Role of Bank Age and Bank Performance
Nai Haryati, Dian Imanina Burhany, Dwi Suhartanto
Polytechnic State of Bandung
Abstract
This study examines the effect of bank age and bank performance on the profitability of Islamic banks. The dependent variable in this study is profitability, while the independent variables are bank age, and bank performance. In addition, profit distribution is treated as an intervening variable. The sampling method used was purposive sampling where samples were taken with the provisions of 12 Public Islamic banks that publish annual reports from 2015 to 2017. The results of the data analysis show that bank age does not have a significant effect on profitability, but NPF (Non-Performing Financing) significant effect on profit sharing. Further, although FDR (Financing to Deposit), and CI (Cost to Income) have no significant effect on profit sharing. Finally, this study also reveals that profit sharing has a significant effect on banks profitability. The implication of theoretical and managerial practices is discussed. Building a competitive advantage to face industry 4.0, one of them with adopting technology is very important for Islamic banking to improve the performance of Islamic banks, improve efficiency and productivity, which will certainly support the performance of profitability.
Keywords: Islamic Bank, Bank Age, Bank Performance
Topic: Industrial Engineering