Abstract
This research aims to analyze the effect of murabahah, mudharabah, and musyarakah financing on nonperforming financing (NPF). It examined the effect of financing distribution on NPF based on the quarterly data from BSI from 2015 to 2022 and used the error correction model (ECM) analysis. The results showed that in the long term, the distribution of murabahah, mudharabah, and musyarakah financing did not affect NPF. Meanwhile, in the short term, only murabahah and musyarakah financing affected NPF with a significance level of 0.05 and 0.03, respectively. The results can be a significant indicator of adequate steps for BSI in taking a financing distribution policy to prevent financing risk. This research only focuses on murabahah, mudharabah, and musyarakah financing which are widely used by society as affecting factors on NPF.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Abedifar P, Molyneux P, Tarazi A, Abedifar P, Molyneux P, Tarazi A (Nov. 2013) Risk in Islamic banking. Rev Financ 17(6):2035–2096. https://doi.org/10.1093/ROF/RFS041
Abusharbeh MT (2014) Credit risks and profitability of Islamic banks: evidence from Indonesia. World Rev Bus Res 4(3):136–147
Ahmad FA (2018) Manajemen Risiko terhadap Pembiayaan Murabahah di Bank Pembiayaan Rakyat Syariah. Az Zarqa’: Jurnal Hukum Islam dan Bisnis 10(2):223–251
Ahmed A (Nov. 2010) Global financial crisis: an Islamic finance perspective. Int J Islam Middle East Financ Manag 3(4):306–320. https://doi.org/10.1108/17538391011093252/FULL/XML
Antonio M (2001) Bank SyarÃah dari Teori ke Praktek. Gema Insani Press, Jakarta
Azmat S, Skully M, Brown K (Sep. 2015) Can Islamic banking ever become Islamic? Pac Basin Financ J 34:253–272. https://doi.org/10.1016/J.PACFIN.2015.03.001
Chong BS, Liu MH (Jan. 2009) Islamic banking: interest-free or interest-based? Pac Basin Financ J 17(1):125–144. https://doi.org/10.1016/J.PACFIN.2007.12.003
Danupranata G, Riduwan R (2020) Risk analysis of Islamic rural Bank financing contracts: evidence of Indonesia. J Islam Econ 3(1):2622–4798
Hamza H, Saadaoui Z (Jul. 2013) Investment deposits, risk-taking and capital decisions in Islamic banks. Stud Econ Financ 30(3):244–265. https://doi.org/10.1108/SEF-FEB-2012-0016/FULL/XML
Hassan MK, Aliyu S (Feb. 2018) A contemporary survey of islamic banking literature. J Financ Stab 34:12–43. https://doi.org/10.1016/J.JFS.2017.11.006
Lassoued M (Nov. 2018) Comparative study on credit risk in Islamic banking institutions: the case of Malaysia. Q Rev Econ Finance 70:267–278. https://doi.org/10.1016/J.QREF.2018.05.009
Mansoor Khan M, Ishaq Bhatti M (2008) Development in Islamic banking: a financial risk-allocation approach. J Risk Financ 9(1):40–51. https://doi.org/10.1108/15265940810842401
Misman F (2012) Financing structures, bank specific variables and credit risk: Malaysian Islamic banks. J Bus:102–114
Mutamimah M, Saputri PL (2022) Corporate governance and financing risk in Islamic banks in Indonesia. J Islam Acc Bus Res vol. ahead-of-print, no. ahead-of-print. https://doi.org/10.1108/JIABR-09-2021-0268/FULL/XML
Prasetyandari CW, Maulidiyah NN, Millah H, Nasrifah M, Billah ZI, Norhayati N (2021) Non performing financing as mediator of financing impact on profitability of Islamic banks in Indonesia. Annual conference of Ihtifaz: Islamic Economics, Finance, and Banking: 15–28
Retnowati A, Jayanto PY (2020) Factors affecting non-performing financing at Islamic commercial banks in Indonesia. Acc Anal J 9(1):38–45. https://doi.org/10.15294/aaj.v9i1.20778
Saputri PL, Agriyanto R, Abdillah M (2020) Analyzing the macroeconomic and fundamental determinants of non-performing financing of Bank Muamalat Indonesia. Economica: Jurnal Ekonomi Islam 11(1):49–78. https://doi.org/10.21580/economica.2020.11.1.4346
Warninda TD, Ekaputra IA, Rokhim R (2019) Do Mudarabah and Musharakah financing impact Islamic Bank credit risk differently? Res Int Bus Financ 49:166–175. https://doi.org/10.1016/j.ribaf.2019.03.002
Wijaya IF, Moro A (Nov. 2022) Trustworthiness and margins in Islamic small business financing: evidence from Indonesia. Borsa Istanbul Rev. https://doi.org/10.1016/J.BIR.2022.10.010
Zeineb GB, Mensi S (2014) Does the PLS paradigm spur the Islamic banks vs conventional banks soundness: case of the global financial crisis. J Econ Develop 2(3):177–192. https://doi.org/10.15640/jeds.v2n3a13
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Saputri, P.L., Ahmadi, H., Kusumawati, D.A. (2023). The Effect of Financing Distribution on NPF in Islamic Banking: A Short- and Long-Term ECM Analysis. In: Mansour, N., Bujosa Vadell, L.M. (eds) Islamic Sustainable Finance, Law and Innovation. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-031-27860-0_18
Download citation
DOI: https://doi.org/10.1007/978-3-031-27860-0_18
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-031-27859-4
Online ISBN: 978-3-031-27860-0
eBook Packages: Economics and FinanceEconomics and Finance (R0)