Ismail Muhammad, Master Student, Faculty of economics, Sriwijaya University, Palembang, Indonesia

ORCID ID: 0000-0002-1856-1506
e-mail: m.ismail294@gmail.com

Syathiri Ahmad, Doctor (Economics), Lecturer at the Faculty of Economy, Sriwijaya University, Palembang, Indonesia

ORCID ID: 0000-0002-2420-6201
e-mail: no-reply+1960a8c0@classroom.google.com

Yulianita Anna, Doctor (Economics), Lecturer at the Faculty of Economy, Sriwijaya University, Palembang, Indonesia

ORCID ID: 0000-0001-8744-3274
e-mail: annayulia@unsri.ac.id

Effect of Financing to Deposit Ratio (FDR), Net Operating Margin (NOM), and Efficiency to Profitability of Islamic Banks in ASEAN

Abstract. Introduction. Profitability is a comparison that can be used to measure a company’s ability to generate profits in general business activities. The main factors in increasing profitability are aspects of liquidity, efficiency and revenue sharing.

Purpose. This study aims to discuss how the influence of the distribution of Third Party Funds (DPK), Efficiency, and Interest Income on the Profitability of Islamic Banks. This study uses the variables of Financing to Deposit Ratio (FDR), Net Operating Margin (NOM), and Efficiency as measured by BOPO (Operating Costs and Operating Income) to Profitability as measured by ROE (Return On Equity) in Islamic banking in Indonesia and Malaysia. The sample in this study consisted of 5 Islamic banking companies in the Southeast Asian region. The population of this study is Islamic banking companies taken from the publications of the ASEAN Islamic Bank for the period 2014 to 2019. The statistical test tool in this study is Eviews 9 which is used for panel data regression testing.

Results. This study shows that the variable operating costs and operating income (BOPO) has a negative and significant effect on Return On Equity (ROE). while the variables Financing to Deposit Ratio (FDR) and Net Operating Margin (NIM) have a negative and insignificant effect on Return On Equity ROE.

Conclusions. In this study efficiency has a significant effect on profitability as measured by ROE.

Keywords: pofitabilit; liquidity; еfficiency; іnterest іncome.

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