Indonesia Conference Directory

The purpose of this paper is to predict the determinants of bank margins (bank-specific as well as macroeconomic condition) in Islamic banks by applying SEM-PLS. Data were collected through financial statements of 11 Islamic banks in Indonesia obtained in each website of bank, covering bank quarter observations for the period of 2013 to the second quarter of 2018. The results show that bank-specific condition has significant effect to the intermediation margin of Islamic banking in Indonesia, while the macroeconomic condition is not significant. This finding improves our understanding on the usage of SEM-PLS to predict the margin intermediation of Islamic banks. This study provides a guidance and strategy for Islamic bank managers to manage their intermediation margin which can affect their customers interest to use Islamic banking services.