Factors That Affect The Profitability Of The Conventional Bank And Shariah Bank In Indonesia

By Muhamad Nadratuzzaman Hosen

ABSTRACT

The research aims to investigate factors of profitability that affected the performance of conventional bank and Islamic bank in Indonesia from period 2002 to 2010. With use regressions models, where ROA and ROE are as dependent variables presenting profitability of banker, whereas internal and external factors as ndependent variables include: GDP per capita, size, financial development indicator (FIR), liquidity, concentration, cost, numbers of branches, operational cost operational income (BOPO), NPL’s ratio, and inflation. The results identify that in conventional bank in Model I, number of branches is the most significant determinant of conventional banks performance and in Model II numbers of branches, GDP per capita, FIR, and liquidity are the most significant determinant of conventional banks performanc, whereas in Islamic bank in Model I, PL’s ratio, numbers of branches, and inflation are the most significant determinant of Islamic bank, and in Model II there are no significant determinants of Islamic bank performance.