The Influence of Company Performance to the Total Financing Provided by a Syariah Bank in Indonesia

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1. International Journal of Economics , Commerce and Management United Kingdom Vol. VI, Issue 9, September 2018 http://ijecm.co.uk/ ISSN 2348 0386 THE INFLUENCE OF COMPANY PERFORMANCE TO THE TOTAL FINANCING PROVIDED BY A SYARIAH BANK IN INDONESIA Syifa Wati Faculty of Economics, Gunadarma University, Jakarta, Indonesia Syifawati19@gmail.com John E. H. J. FoEh Faculty of Economics, Gunadarma University, Jakarta, Indonesia johnfoeh@gmail.com Abstract The purpose of this study was to compare the Third Party Fund, Capital Adequacy Ratio, Non Performing Financing and Return On Assets. Furthermore, it was also aimed to find out the influence of Third Party Fund, Capital Adequacy Ratio, Non Performing Financing, and Return On Assets to the total financing. The method used in this research is secondary data collection. Data were analyzed with quantitative descriptive analysis and multiple linear regression analysis using SPSS software version 22. The results of the research indicate that the development of Third Party Funds of the comparison in the period of 2011-2015, showed that all financial performance indicators -used in this research- were fluctuated significantly, with the trend of both negative and positive. Simultaneously, the statistical tests showed that Third Party Fund, Capital Adequacy Ratio, Non Performing Financing and Return On Assets have a very significant influence to the total financing while the partial statistical tests indicate that the Third Party Funds and Non Performing Financing influence the total financing provided by Bank Syariah in Indonesia. Capital Adequacy Ratio and Return On Assets did not give effect to the total financing provided by Bank Syariah in Indonesia because the data on these variables are not irregular and fluctuates over time. Keywords: Total Financing, Third Party Funds, Capital Adequacy Ratio, Non Performing Financing, Return On Asset Licensed under Creative Common Page 630
2. International Journal of Economics , Commerce and Management, United Kingdom INTRODUCTION Islamic bank is a banking system that developed based on sharia or Islamic law. The first Sharia Bank in Indonesia, established in 1991, namely Bank Muamalat Indonesia with share ownership of 25% by the Indonesian Ulama council (MUI). Until the issuance of LAW No. 21 year 2008, then Islamic banking has a legal and clear basis. The monetary crisis that occurred in 19971998 proved that the performance of the Islamic system that is applied by sharia banking was able to survive facing the monetary crisis (M. LuthfiQolby, 2013). Up to 2015, there have been 12 Sharia Banks (BUS), 22 Sharia Business Units (UUS), 161 Banks of People Financing Sharia (BPRS) with the number of offices of sharia banking as much as 2.881 scattered in almost regions of Indonesia. The increasing number of Banks and the office of the sharia banking operating in Indonesia gave a positive impact for the development of the sharia banking industry. This increase provided convenience for the people of Indonesia to be able to enjoy the services of sharia banking. Rapid development in Islamic Banks in Indonesia is considered because during this time the Islamic Bank was able to target the sharia loyalist, i.e. consumers who believe that the bank interest was haram. On the other hand, Islamic Banks were experiencing very strict conditions of competition because all parties involved in banking were equally engaged in rational markets which are sensitive to the bank interest. The depositors pay very much attention to the return or profit that they earn when invest their money in the bank (Nana Nofianti, et, al, 2015). Along with the increasing economic growth, sharia banking is currently still in the stage of development with a fixed incentive to increase its share, especially from the financing side. One of the main indicators to measure the development of sharia banking in Indonesia is to see how the magnitude of the total financing channeled by sharia banks to customers. Based on the statistical data of sharia banking in Indonesia in 2015, the number of distribution of funds (financing) did by sharia bank in Indonesia continues to increase yearly. Some contract (contract) that offered by sharia banking, murabahah (sale and purchase) was the most high compared with mudaraba and musharaka (for the results). Internal factors also affect the amount of financing disbursed. As for some of the financial ratios frequently used to assess the internal condition of the company, among others the capital ratio of the bank, which is represented by the ratio of Return On Assets (ROA), the ratio of the productivity of the bank represented by Non-Performing Financing (NPF) and the ratio of bank capital that is represented by the Capital Adequacy Ratio (CAR). From some research, there were differences in the factors that influence the distribution of funding. Therefore, from these considerations this research took four independent variables such as; Third-Party Funds (TPF), Capital Adequacy Ratio (CAR), Non Performing Financing Licensed under Creative Common Page 631
3. © Wati & FoEh (NPF), and Return On Assets (ROA).While the dependent variable is the distribution of funding. Then the object that used in this study were all Islamic Banks and Islamic Business Units in Indonesia. LITERATURE REVIEW Bank According to the Indonesian Law No. 10/1998 about banking; banks are business entities that raise funds from the public in the form of deposits and distribute to the public in order to improve the living standard of the people. Shariah Bank According to the provisions contained in the Regulations of Bank Indonesia no. 2/8/PBI/2000, Article I, of the Sharia Bank is a commercial bank as referred to in Act Number 7 Year 1992 about banking and has been amended by Act Number 10 of 1998 conducting business based on the principles of Islamic law, including sharia business units and branch offices of foreign banks conducting business activities based on the principles of Islamic law. Financing Financing is widely means funding, spending incurred to support investments that have been planned, well made and run by others. In a narrow sense, the financing is used to define the funding done by financing institutions, such as Islamic banking to customers. (Binti Nur Asiyah, 2015). Third-Party Funds According to LAW No. 21 Year 2008 about sharia banking (Article 1) mentioned that, ”the Deposit is a fund entrusted by Customer to Islamic Bank and/or UUS based on the “Akadwadi'ah” or other contracts that do not conflict with Sharia Principles in the form of demand deposits, savings, etc. Third-party Funding formula (TPF) is as follows: TPF = Current + Deposit + Savings The greater the sources of funds raised then will be more big financing which will be disbursed by the bank. On the contrary, the less the source of the funds raised then will be getting a bit of financing that will be channeled by the bank (SlametRiyadi, 2006). Licensed under Creative Common Page 632
4. International Journal of Economics, Commerce and Management, United Kingdom Capital Adequacy Ratio (CAR) Andrea Zulfiah and Joni Susilowibowo, (2014) state that Capital Adequacy Ratio (CAR) is a ratio that shows how much assets of banks that contain risks (credit, investments, securities, bills of other banks) financed from the own capital banks, in addition to obtaining funds from sources outside banks, such as public funds, loans (debt), and so on. Further, CAR can be formulated as follows: CAR = Tier One Capital+Tier Two Capital