the profitab ility determinants of conventional …

THE PROFITABILITY DETERMINANTS OF CONVENTIONAL

AND ISLAMIC BANKS IN INDONESIA

By

RAHMI ZUHA EMDI

014201300193

A Skripsi Presented to the

Faculty of Business President University

In Partial Fulfillment of the Requirements for

Bachelor Degree in Business, Major in Management

December 2016

V

ABSTRACT

The main object of this study is to investigate the internal factors that influence the profitability between conventional banks and Islamic banks in Indonesia over the quarterly period 2011-2016. The study involved all five conventional commercial banks and five Islamic commercial banks by using secondary data from Financial Services Authority of Indonesia (OJK). The test was adopted to examine ROA (Return On Asset) as the dependent variable and CAR (Capital Adequacy Ratio), LDR/FDR (Loan to Deposit Ratio/Financing to Deposit Ratio), NPL/NPF (Non-Performing Loan/Non-Performing Financing) as the independent variables. The result of multiple linear regression analysis indicated there was a positive significant impact of CAR and LDR on ROA in conventional bank. Meanwhile for Islamic banks found that NPF was significant but negatively impact on ROA. On the other hand, CAR and FDR had no significant effect on ROA of Islamic banks. Further the study revealed the significant different of each variables between conventional banks and Islamic banks in Indonesia.

Keyword: ROA, CAR, LDR, NPL, FDR, NPF, Conventional Banks, Islamic Banks

VI

ACKNOWLEDGEMENT

In the name of Allah, the Most Gracious and the Most Merciful

A deepest gratitude to Allah SWT for giving me strengths, health, guidance and His countless

blessing for me in all the time of my life especially in completing this research. Special

appreciation is delivered to my skripsi adviser, Anita Munir, S.E., MFin., for the patience, advice,

guidance and support. The success of this skripsi also depends on her rewarding suggestions and

comments during the research period. My appreciation also to lecturers and office staffs of

President University for their supports, teaching and facilities in completing this skripsi.

My gratefulness to my beloved parents, Mr. Erwandi and Mrs. Elmi Husni for their prayers,

endless love and encouragement in order their daughter will be able to graduate. Thank you to my

beloved brother, Arnsohio Muhammad Emdi for his prayers and support.

My special thanks to Ms. Shinta Havidz and Mr. Purwanto for the teaching and advice during the

arrangement of this skripsi. Sincere also presented to:

Dhani Wasistha Parussa, Ulfa Dwinda Umar, Rayang Amiriyanti, Riani Septi Hertini, Putri

Dini Azizi, Riska Nurhayati, Rahma Yustika Dewi, Nurfaeisyah, Tri Wulan Sari, Sindy Mega

Rosita, Rika Melyana, Rima Sera, Safira Rizqia for their love, understanding, kindness, and

moral support during my study. Thank you for the amazing memories and never-ending

friendship.

Islamic Banking and Finance mates for the unforgettable moments that we have spent together

during the study.

y in President

University.

The kindness means a lot to me to those who indirectly contributed in my research. Thank you

very much.

Cikarang, Indonesia, December 16th 2016

Rahmi Zuha Emdi

VII

TABLE OF CONTENTS

TITLE PAGE ................................................................................................................................... I

PANEL OF EXAMINERS ............................................................................................................. II

SKRIPSI ADVISER ..................................................................................................................... III

RECOMMENDATION LETTER ................................................................................................ III

DECLARATION OF ORIGINALITY ......................................................................................... IV

ABSTRACT ....................................................................................................................................V

ACKNOWLEDGEMENT ............................................................................................................ VI

TABLE OF CONTENTS ............................................................................................................. VII

LIST OF TABLES ........................................................................................................................ XI

LIST OF FIGURES ..................................................................................................................... XII

CHAPTER I .................................................................................................................................... 1

INTRODUCTION .......................................................................................................................... 1

1.1. Background of Study ........................................................................................................ 1

Table 1.1 Data of ROA in conventional and Islamic banks period 2011-2016....................... 2

Table 1.2 Data of Financial Ratio of Conventional and Islamic Banks: ................................. 3

Problem Identification ................................................................................................................. 5

Statement of Problem .................................................................................................................. 6

Research Objective ...................................................................................................................... 6

1.2 Significance of the Study ...................................................................................................... 7

1.3. Scope and Limitation of the Study ....................................................................................... 7

1.4 Definition of Terms ............................................................................................................... 8

CHAPTER II ................................................................................................................................... 9

LITERATURE REVIEW ............................................................................................................... 9

VIII

2.1. Introduction .......................................................................................................................... 9

2.1.1 Overview on Bank .......................................................................................................... 9

2.2. Return on Assets................................................................................................................... 9

2.3. Capital Adequacy Ratio ..................................................................................................... 10

2.4. Non-Performing Loan and Non-Performing Financing ..................................................... 11

2.5. Loan to Deposit Ratio and Financing to Deposit Ratio ..................................................... 12

2.6. Research Gaps .................................................................................................................... 12

CHAPTER III ............................................................................................................................... 14

RESEARCH METHODOLOGY.................................................................................................. 14

3.1. Introduction ........................................................................................................................ 14

3.2. Theoretical Framework ...................................................................................................... 14

3.3. Hypothesis .......................................................................................................................... 15

3.4. Operational Definitions of Variables ................................................................................. 15

3.5. Instrument........................................................................................................................... 16

3.6. Sampling............................................................................................................................. 16

3.7. Data Analysis Method ........................................................................................................ 17

3.7.1. Descriptive Statistics Analysis .................................................................................... 17

3.7.2. Assumption Classic Test ............................................................................................. 17

3.7.3. Multiple Linear Regression ......................................................................................... 18

3.7.4. Hypothesis Testing ...................................................................................................... 19

CHAPTER IV ............................................................................................................................... 23

RESULT AND DISCUSSION ..................................................................................................... 23

4.1 Gathered Sampling Data ..................................................................................................... 23

4.2 Result of Data Analysis ....................................................................................................... 23

4.2.1 Descriptive Statistics .................................................................................................... 23

IX

4.3 Assumption Classic Test Result .......................................................................................... 26

4.3.1 Normality Test .............................................................................................................. 26

4.3.2 Multicollinearity Test ................................................................................................... 26

4.3.3 Heteroscedasticity Test ................................................................................................. 27

4.3.4 Autocorrelation Test ..................................................................................................... 27

4.4 Multiple Linear Regression ................................................................................................. 27

4.5 Hypothesis Testing .............................................................................................................. 28

4.5.1 Significant Simultaneous Test (F-Test) ........................................................................ 28

4.5.2 Significant Partial Test (T-Test) ................................................................................... 29

4.5.3 Coefficient Multiple Determination Test (R2) .............................................................. 29

4.5.4 Group Statistics Result ................................................................................................. 30

4.5.5 Independent Sample Test.............................................................................................. 30

4.6 Interpretation of Result........................................................................................................ 32

4.6.1 The influence of Capital Adequacy Ratio toward the Return on Asset........................ 32

4.6.2 The Influence of Loan to Deposit Ratio and Financing to Deposit Ratio toward Return

on Asset ................................................................................................................................. 33

4.6.3 The influence of Non-Performing Loan or Non-Performing Financing toward ROA . 34

4.6.4 The influence of Capital Adequacy Ratio, Loan to Deposit Ratio/Financing to Deposit

Ratio, Non-Performing Loan/Non-Performing Financing toward Return on Asset .............35

CHAPTER V ................................................................................................................................ 36

CONCLUSION AND RECOMMENDATION ............................................................................ 36

5.1 Conclusion ........................................................................................................................... 36

5.2 Recommendation ................................................................................................................. 37

REFERENCES ............................................................................................................................. 39

APPENDIX ................................................................................................................................... 42

Table 2.1. for Research Gaps ........................................................................................................ 42

X

Table 3.1. List of Banks that used (in million) ............................................................................. 43

Table 4.1. Sampling Data.............................................................................................................. 43

Table 4.2. Descriptive Data for Conventional Banks ................................................................... 44

Table 4.3. Descriptive Data for Islamic Banks ............................................................................. 44

Table 4.4. Multicollinearity Test for Conventional Banks ........................................................... 45

Table 4.5. Multicollinearity Test for Islamic Banks ..................................................................... 45

Table 4.6. Durbin-Watson Result for Conventional Banks .......................................................... 45

Table 4.7. Durbin-Watson Result for Islamic Banks .................................................................... 46

Table 4.8. Multiple Linear Regression Result for Conventional Banks ....................................... 46

Table 4.9. Multiple Linear Regression Result for Islamic Banks ................................................. 46

Table 4.10. Simultaneous Result for Conventional Banks ........................................................... 47

Table 4.11. Simultaneous Result for Islamic Banks ..................................................................... 47

Table 4.12. Significant Partial Test Result of Conventional Banks ............................................. 47

Table 4.13. Significant Partial Test Result of Islamic Banks ....................................................... 48

Table 4.15. Coefficient Multiple Determination Test Result for Conventional Banks ................ 48

Table 4.16. Coefficient Multiple Determination Test Result for Islamic Banks .......................... 48

Table 4.17. Group Statistics Test Result ....................................................................................... 49

Table 4.18. Independent Sample Test Result ................................................................................ 50

Figure 4.1. Histogram for Conventional Banks ............................................................................ 51

Figure 4.2. Histogram for Islamic Banks ...................................................................................... 51

Figure 4.3. P-Plot for Conventional Banks ................................................................................... 52

Figure 4.4. P-Plot for Islamic Banks ............................................................................................. 52

Figure 4.5. Scatterplot Result for Conventional Banks ................................................................ 53

Figure 4.6. Scatterplot for Islamic Banks ..................................................................................... 53

XI

LIST OF TABLES

Table 2.1. for Research Gaps ........................................................................................................ 42

Table 3.1. List of Banks that used (in million) ............................................................................. 43

Table 4.1. Sampling Data.............................................................................................................. 43

Table 4.2. Descriptive Data for Conventional Banks ................................................................... 44

Table 4.3. Descriptive Data for Islamic Banks ............................................................................. 44

Table 4.4. Multicollinearity Test for Conventional Banks ........................................................... 45

Table 4.5. Multicollinearity Test for Islamic Banks ..................................................................... 45

Table 4.6. Durbin-Watson Result for Conventional Banks .......................................................... 45

Table 4.7. Durbin-Watson Result for Islamic Banks .................................................................... 46

Table 4.8. Multiple Linear Regression Result for Conventional Banks ....................................... 46

Table 4.9. Multiple Linear Regression Result for Islamic Banks ................................................. 46

Table 4.10. Simultaneous Result for Conventional Banks ........................................................... 47

Table 4.11. Simultaneous Result for Islamic Banks ..................................................................... 47

Table 4.12. Significant Partial Test Result of Conventional Banks ............................................. 47

Table 4.13. Significant Partial Test Result of Islamic Banks ....................................................... 48

Table 4.15. Coefficient Multiple Determination Test Result for Conventional Banks ................ 48

Table 4.16. Coefficient Multiple Determination Test Result for Islamic Banks .......................... 48

Table 4.17. Group Statistics Test Result ....................................................................................... 49

Table 4.18. Independent Sample Test Result ................................................................................ 50

XII

LIST OF FIGURES

Figure 4.1. Histogram for Conventional Banks ............................................................................ 51

Figure 4.2. Histogram for Islamic Banks ...................................................................................... 51

Figure 4.3. P-Plot for Conventional Banks ................................................................................... 52

Figure 4.4. P-Plot for Islamic Banks ............................................................................................. 52

Figure 4.5. Scatterplot Result for Conventional Banks ................................................................ 53

Figure 4.6. Scatterplot for Islamic Banks ..................................................................................... 53

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CHAPTER I

INTRODUCTION

1.1. Background of Study

Based on Law No. 10 of 1998 bank as an intermediary’s institution has an important role

among parties who have the funds with the parties who need the funds. Bank compiles the

fund from the surplus unit and distributes the fund to the deficit unit in order to improve the

standard living of people. In running the business, the bank divided into Conventional Bank

and Islamic Bank which is run their business in the Syariah principle. Conventional banking

system is the one that operating based on the interest-based banking. While Islamic bank is

an interest free banking system (Ramlan & Adnan 2015).

Both of conventional and Islamic banks are profit-making organizations which has aim to

gain profit in their business activities. The differences between conventional and Islamic

banks are in Islamic banks it is prohibited to trade in riba or anything business activities that

is not compliance with Syariah principles, but in contrast conventional banks has no

restrictions (Khir et al. 2008). Conventional and Islamic banks create a competition to satisfy

their customers with their own expectations and also for the long term benefit in the term of

the economy.

Banks have to maintain their financial performance for the public trust. There is a standard of

the banking industry to know or evaluate the health, it can be seen from the financial statement

of the bank that published periodically. Financial statement is a “road map” that can tells

about the banks conditions in the past, current, and perhaps can predict for the future.

Performance means how adequately a company meets the needs of its owner, employees,

depositors, and borrowing customers which is must to keep in the government regulation from

the company’s activities (Rose & Hudgins, 2008). This report is very useful to determine the

condition of the bank especially for owners, management, government, and the society

(Amelia, 2015). Based on BI regulation No.6/10/PBI/2004 on 12th April 2004 stated that

CAMELS (Capital, Asset Quality, Management, Earning, Liquidity, Sensitivity to Market

Risk) is the analysis to measure the health of the banks. The aspects of the analysis by using

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the financial ratio of the bank. Capital covered by CAR, Asset Quality covered by NPL/NPF,

Management covered by application system of risk management, Earnings covered by ROA,

Liquidity covered by LDR/FDR and Sensitivity to Market Risk covered by the assessment of

the capital reserve which can cover the fluctuation of interest rate.

ROA is a ratio that can be used to measure how profitable the company (Siahaan &

Anantadjaya 2013). Researcher wants to measure the financial performance by using the

financial ratio of the bank. Profitability is the most important indicator to measure the

performance or operation of the bank. In determined the bank’s health, Central Bank (BI)

more concerned in the ROA rather than ROE because BI more focus to measure the

profitability of the bank in the term of the asset which is the fund comes from the deposits of

the customers, so ROA is used to measure the bank’s profitability as a whole (Hakim and

Rafsanjani, 2015). ROA shows how much profit that the bank will get for each Rp 1 in the

assets that owned by the company (Siahaan & Anantadjaya 2013). The greater ROA of a bank,

the higher profit that the bank’s achieved and the better bank’s position to use the asset. Based

on Bank Indonesia Circular Letter No. 6/9/PBI/2004 the standard of ROA is 1.5%. See from

the table below:

Table 1.1 Data of ROA in conventional and Islamic banks period 2011-2016

NO Type of Bank ROA

2011 2012 2013 2014 2015 2016

1 Conventional Banks 1.91% 2.12% 2.44% 1.81% 1.53% 1.47%

2 Islamic Banks 1.27% 2.26% 1.45% 0.67% 0.77% 1.27%

Source: Data Published by 10 banks (5 Conventional and 5 Islamic Banks) from OJK website

Mostly for the conventional bank, the ratio of ROA was good enough which was more than

1.5% although in 2014-2016Q2 decreased into 1.47%. While for the Islamic banks the ratio

of ROA still fluctuated but still keep improving to achieve 1.5% point. Researcher can use the

data to analyze about the factor that affect ROA. It can be seen from the financial report of

each bank. Information about the financial position, financial performance, and other

information can be seen from the financial report (Ayuningrum, 2011).

In this study aspect of capital asset by the CAR (Capital Adequacy Ratio), asset quality aspects

by NPL/NPF (Non-Performing Loan/ Financing), the liquidity aspect by LDR/FDR

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(Loan/Financing to Deposit Ratio) and for the profitability by ROA (Return on Asset). That

financial ratio is used to know how the influence of CAR, NPL/NPF, LDR/FDR toward ROA

in conventional and Islamic banks in Indonesia period 2011Q1-2016Q2. See the table below

to know the data of each ratio that used.

Table 1.2 Data of Financial Ratio of Conventional and Islamic Banks:

Ratio Year

Average 2011 2012 2013 2014 2015 2016

CAR 20.28% 19.85% 44.96% 27.26% 22.18% 23.52%

LDR 82.71% 87.35% 96.05% 89.46% 99.23% 90.26%

NPL 1.46% 0.65% 0.92% 1.06% 2.17% 2.63%

ROA 1.91% 2.12% 2.44% 1.81% 1.53% 1.47%

Ratio Year

Average 2011 2012 2013 2014 2015 2016

CAR 24.31% 16.60% 16.48% 17.97% 16.35% 16.95%

FDR 100.08% 98.99% 96.86% 91.50% 92.20% 91.90%

NPF 1.79% 1.32% 1.48% 2.38% 2.73% 2.99%

ROA 1.27% 2.26% 1.45% 0.67% 0.77% 1.27%

Source: Data Published by 10 banks (5 Conventional and 5 Islamic Banks) from OJK website

The ratio of CAR is conventional banks in the period 2011-2013 was fluctuated until 44.96%

in 2013 and decrease by 22.18% in 2015 but increase by 23.52% in 2016Q2. While during

the decreasing of CAR in 2011-2012 and 2013-2015 the ratio of ROA still keeps increasing

until 2013. According to Kristiani & Yovin (2016), the higher of CAR the better performance

of the bank which means the increasing of ROA. In contrast, it happened in 2015-2016 the

increasing of CAR from 22.18%-23.52% affect the ROA, it decreased from 1.53% become

1.47%. The same thing also happened in the Islamic banks.

The ratio of LDR in 2014 is 89.46% become 99.23% in 2015, in contrast with ROA in 2014

is 1.81% decrease become 1.53% in 2015. While according to Ayunigrum (2011), if the

demand for credit increase, it also increase the profitability that makes ROA will show an

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increasing number. Islamic banks meet the same thing, by increased of FDR in 2013 to 2014

from 91.50% becomes 92.20% while the ROA decrease from 1.45% to 0.67%.

According to Susanto & Kholis (2016), NPL is a bad credit in the term of the payment that

can occur due to internal or external factor. This ratio is one of the key factors to know the

performance of functions of the bank (Siahaan & Anantadjaya 2013). It should be the

decreasing of the quality of bad credit will increase the number of ROA ratio. See from the

table in 2012 to 2013 the ratio of NPL was increasing but the ratio of ROA also keep increased

and that things also happened in Islamic banks in 2014-2016.

Some researcher had conducted a research to identify the profitability of the bank by the

financial ratio in one specific bank such as in conventional banks or Syariah banks and even

PT XYZ Syariah Bank. In this research, researcher used the financial ratio of CAR, NPL/NPF,

LDR/FDR directly both for conventional banks and Islamic banks in the same time period for

2011Q1-2016Q2. Previous research by Defri (2012) used CAR, LDR, BOPO of ROA in the

banking industry that listed in Indonesia Stock Exchange (conventional bank) found that CAR

has a positive insignificant effect toward ROA. On the other hand, Hardiyanti (2012) used

CAR, NPL, LDR toward ROA found that CAR has a positive significant effect toward the

profitability of the bank. While for Islamic banks, the previous researcher Havidz & Setiawan

(2015) found that CAR has a positive significant effect while Defri (2012) found that CAR

has positive insignificant effect in Islamic banks. NPL has a negative significant effect based

on the research by Susanto & Kholis (2016), but on the other hand, NPL has no significant

effect has been done by the previous also (Dasih, 2014; Alifah, 2014). Islamic banks aspect

of NPF according to Amelia (2015) found that NPF has negative and insignificant effect

toward the profitability of the bank while based on Abusharba et al. (2013), NPF has a

negative significant effect. LDR in the previous research showed that LDR has a positive

significant effect (Hardiyanti, 2012; Dasih, 2014; Alifah, 2014). On the other hand, according

to Adiyanto (2016) found that LDR has a negative insignificant effect. For the Islamic banks

Amelia (2015) found that FDR has a negative insignificant effect toward ROA while

Widyaningrum and Septiarini (2015) found that FDR has a positive insignificant effect. The

availability of data and limitation of time the researcher focus conducting the research on five

Conventional and five Islamic banks period 2011Q1-2016Q2. Based on the background

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above, the author decides to conduct further research with the title “The Profitability

Determinants of Conventional and Islamic Banks in Indonesia”.

Problem Identification

Based on the table 1.1 the data of average ROA in five conventional banks and five Islamic

banks showed that the ratio of ROA still fluctuated. Look at to the internal factors that will

affect the ratio of ROA and indicates that each variables CAR (Capital Adequacy Ratio), asset

quality aspects of NPL/NPF (Non-Performing Loan/ Financing), the liquidity aspect through

LDR/FDR (Loan/Financing to Deposit Ratio) have an increasing and decreasing from 2011-

2016Q2. So can conclude that the mean of each variable fluctuated, an increasing and

decreasing like in 2015-2016 the increasing of CAR in conventional banks from 22.18%-

23.52% affect to the decreasing of ROA from 1.53% become 1.47%.

From the previous research, there were differences of the results about the variables that affect

ROA. For the conventional banks according to Defri (2012) used CAR, LDR, BOPO of ROA

in the banking industry that listed in Indonesia Stock Exchange (conventional bank) found

that CAR has a positive insignificant effect toward ROA. On the other hand Hardiyanti (2012)

used CAR, NPL, LDR toward ROA found that CAR has a positive significantly toward ROA.

While Islamic banks according to Ismawati (2009) found that CAR has a positive significant

effect while Febrianti (2013) found that CAR has a positive insignificant effect in Islamic

banks.

Nugroho (2011) and Ramadhan (2015) found that FDR has positive significant effect toward

ROA, Alifah (2014) and Ayuningrum (2011) found that LDR has positive significant effect

while Susanto & Kholis (2016) found that LDR has no significant effect. Ismawati (2009) and

Widyaningrum & Septiarini (2015) found that FDR has no significant effect toward ROA.

Kristiani & Yovin (2016) and Susanto & Kholis (2016) found that NPL has negative

significant effect in contrast Dasih (2014) and Alifah (2014) found that NPL has positive

insignificant effect while Nugroho (2011) found that NPF has negative significant effect

toward ROA. Some research showed the different result, not consistency with the research

that has been done before, specifically the researcher intend to purpose further research of the

analysis of the determinants variables that determine the conventional Islamic bank’s

profitability during period 2011Q1-2016Q2 in Indonesia.

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Statement of Problem

According to the background, this research will discuss the internal factors that affect ROA

during period of 2011Q1-2016Q2, as the research questions as follows:

For conventional banks:

1. Does CAR have a significant effect toward ROA?

2. Does NPL has a significant effect toward ROA?

3. Does LDR has a significant effect toward ROA?

4. Does CAR, NPL, LDR have a partial and simultaneous effect toward ROA?

For Islamic banks:

1. Does CAR have a significant effect toward ROA?

2. Does NPF has a significant effect toward ROA?

3. Does FDR has a significant effect toward ROA?

4. Does CAR, NPF, FDR have a partial and simultaneous effect toward ROA?

Research Objective

The objectives of this research are:

For conventional banks period 2011Q1-2016Q2:

1. To analyze the effect of CAR toward ROA.

2. To analyze the effect of NPL toward ROA.

3. To analyze the effect of LDR toward ROA.

4. To investigate whether there is a partial and simultaneous effect of independent variables

(CAR, NPL, LDR) toward ROA.

For Islamic banks period 2011Q1-2016Q2:

1. To analyze the effect of CAR toward ROA.

2. To analyze the effect of NPF toward ROA.

3. To analyze the effect of FDR toward ROA.

4. To investigate whether there is a partial and simultaneous effect of independent variables

(CAR, NPF, FDR) toward ROA.

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1.2 Significance of the Study

The benefits of this research are:

1. For the Author

Through this study, the author can get insight and knowledge about factors that affect ROA,

the relationship of each factor in conventional and Islamic banks during period 2011Q1-

2016Q2 in Indonesia.

2. For Conventional and Islamic banks

The result of this research is expected to provide information for the bank to evaluate and

describe their financial performance between conventional and Islamic banks and hope this

research can give contributions in the decision making in banking policy in order to

maximize the profit.

1.3. Scope and Limitation of the Study

The researcher could not be generalized so there is some limitation that probably affects the

result. The scope and limitation of the study are:

1. The sampling consists of five conventional banks and five Islamic banks in Indonesia.

2. The research used quarter report period 2011Q1-2016Q2.

3. The research uses four financial ratios (CAR, NPL/NPF, LDR/FDR) of the banks that

expected to influence profitability (ROA) of each in conventional and Islamic banks.

The assessment of variables studies based on:

1. The financial report of conventional and Islamic banks in Indonesia during period 2011Q1-

2016Q2 that published by Financial Services Authority (OJK).

2. The financial report of conventional and Islamic banks in Indonesia during period 2011Q1-

2016Q2 that published by each bank.

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1.4 Definition of Terms

1. ROA

The ratio of managerial efficiency’s indicator that used to measure the management’s

capability of the bank to earn profit (Al-Gazzar, 2014).

2. Capital Adequacy Ratio (CAR)

This ratio can be set as a requirements to manage their capital in business acitivities without

ignoring the risk (Siahaan & Anantadjaya, 2013).

3. Non-Performing Loan (NPL)

The ratio as the key to assess the performance of functions of the bank, the intermediary

agency between exceeds funds and those who needs funds (Hendri, 2009).

4. Non-Performing Financing (NPF)

Describe the capacity and measured the asset quality in spreading risks (Sundarajan &

Errico, 2012).

5. Loan to Deposit Ratio (LDR)

The percentage ratio that shows the bank’s loans or financing funded through deposit ratio

(Al-Gazzar, 2014).

6. Financing to Deposit Ratio (FDR)

The percentage ratio that shows the bank’s financing funded through deposit ratio (Al-

Gazzar, 2014).

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CHAPTER II

LITERATURE REVIEW

2.1. Introduction

This chapter will discuss further about the theories regarding to the topic of this research.

The discussion will be divided no several parts, which are the definition of each variables

and the relationship between dependent variables and independent variables.

2.1.1 Overview on Bank

Bank defined as a business unit that raise funds from the public in savings and distribute

it in credit or others to improve the living standards of people (Law No. 10 of 1998

dated 10 November 1998). According to PSAK (Pernyataan Standard Akunting

Keuangan) No. 31 (1999), bank is an institutions that has the role between parties who

have surplus funds and parties need funds, also the institution that serves the payment

transaction.

In conventional banks no matter what the condition of the organization is, the customer

still must to pay the interest and there is no certain agreement of the contract but in

Islamic banks if the customers or organization suffered losses the banks and customers

will share the loss based on the agreement at the first time and the activities must to

have the contract like in Murabaha, Wadiah, Mudharabah or Musyarakah

(Indonesiainvestment, 2015).

2.2. Return on Assets

Variables of this research use the financial ratio data of the banks. Financial ratio analysis is

a calculation that can be used as an overview of the financial development and financial

position of the company. Financial statement can tells about the banks conditions in the past,

now, and perhaps can predict for the future (Rose & Hudgins, 2008). Financial statement

variable is one of the factor that can control bank’s management that relates to the balance

sheet and income statement. Financial ratios consider as the internal determinants and factor

that control the management consider as the external factor such as macroeconomic

environment like competition, regulation, concentration, market share, ownership, scarcity

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of capital, money supply, inflation and size (Haron, 2004). This research use financial ratio

to accessing the bank’s financial performance. Financial ratio that indicates of this research

consists of ROA as the dependent variable and CAR, NPL/NPF, LDR/FDR as the

independent variables.

Profitability is a fundamental that can be used to measure the bank’s performance and it is

important for the depositors, the management and also for the bank’s regulators. The ratio

that used to measure the profitability in this research is ROA. Return on Assets is used to

measure the efficiency and the ability of the bank to generate profit by using bank’s assets.

The smaller this ratio indicates that the management could not manage effectively the asset

to increase revenue and reduce cost. In other words, the higher ROA the better productivity

of assets that can increase the performance of the bank and also the income. Automatically

it can increase the attractiveness of the investors to the company since the rate of return or

dividend will be even greater. Besides, the effect can also increase the stock price if the high

number ratio of ROA happened. To calculate ROA, based on Bank Indonesia Circular Letter

No. 3/30/DPNP dated on December 14th 2001, the formula is:

ROA =

2.3. Capital Adequacy Ratio

CAR is the ratio to measure the bank’s ability to maintain sufficient capital. Bank’s duty is

to collect funds and distribute back in the form of loan. If the bank has a good capital and

meet the requirements it is a possibility to create profit so the bank’s profit will increase if

the CAR ratio is greater which means the bank is able to fund the operation of the bank or in

other words, the higher CAR is the better performance of the bank (Kristani & Yovin 2016).

CAR used as the independent variable that influence ROA since it connected with the risk

of the bank that will automatically affect the profitability of the bank. If the higher ratio of

CAR (based on BI regulation standard minimum of CAR is 8%). If the high ratio of CAR

but lack of the community trust it will not affect to the ROA. According to BI regulation,

No. 10/15/PBI/2008, article 2 paragraph 1 stated that Banks are required to provide a

Profit before taxes

Total assets X 100%

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minimum capital of 8% of risk-weighted assets. Based on Bank Indonesia Circular Letter

No. 6/23/DPNP dated 31th May, 2004, to calculate CAR the formula is:

CAR =

2.4. Non-Performing Loan and Non-Performing Financing

NPL ratio indicates the risks of loan payment by the debtor. After the bank gives credits,

banks have to monitor the use of credits as well, the ability and compliance the debtor to

meet their obligations since if there is a problem of the debtor to pay, and it can decrease the

bank’s profitability (Kristani & Yovin 2016). Credit is the greatest asset investment banks.

The ability to provide new loans will be hampered if the credit return failed. Credit capital is

needed to support the credit growth. According to Bank Indonesia Circular Letter No.

13/24/DPNP on October 25th 2011 the total loans is loans to non-third party funds. NPL

formula is:

NPL =

In financing, credit risk will happen if the bank cannot obtain the principle of financing

repayment. Banks will be more concern with the credit risk since financing activity is the

main thing of business activities. Collectability level can be used to measure the loss that

resulted by credit risk. Collectability in the bank can be divided into 5, pass/current, special

mention, sub-standard, doubtful, and loss. Based on its collectability, NPF is consist of sub-

standard, doubtful and loss (Bagaskara, 2016).

The formula of NPF is:

NPF =

The lower ratio of bad debt the better performance of the bank According to Bank Indonesia

Circular Letter No. 17/19/DPUM dated July 8th 2015, standard of maximum NPF is to be 5%

Capital

Risk Weighted Assets

X 100%

Non-Performing Loans

Total Loans

X 100%

Bad Collectability Financing (Sub-standard, doubtful, loss)

Total Financing

X 100%

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which means that if the ratio of NPF is more than 5% the bank is indicated to have a credit

risk problem.

2.5. Loan to Deposit Ratio and Financing to Deposit Ratio

LDR is used as a liquidity measurement to measure the amount of funds in the form of credits

from the funds that collected by the bank. The higher ratio of LDR shows more risky the

conditions of bank’s liquidity in contrast if the lower ratio of LDR means that the bank is not

efficient in channel back the funds to the third party funds (Kristani & Yovin 2016). LDR

shows the ability of the bank to repay the withdrawal of funds by the depositor to rely on

loans as the source of liquidity. According to BI regulation No 17/11/PBI/2015 dated on June

25th 2015 LDR changed into LFR (Loan to Funding Ratio with the standard 78%-92%.

Changed in LFR since the formula of LDR also change since LDR will used the securities

issued by the bank. So, the formula of LFR is:

LFR =

FDR can describe how much the funds from the third party funds that used for financing in

Islamic banks. If the high number ratio of FDR indicates that the bank is on the low capacity

condition of the liquidity. It can measure the banks growth in the term of financing and

lending. According to Bank Indonesia Circular Letter No. 12/11/DPNP/2010 standard of

FDR ratio is between 85%-110%. FDR can be calculated as follows:

FDR =

2.6. Research Gaps

Research on the profitability of the banking system has been done in economic research.

Besides, Indonesia is the largest population of muslim in the world but the people still has

lack of information and trust about syariah bank in Indonesia. It proves from the total asset

if compare with the conventional, Islamic bank is quite far different. Indonesian government

through Financial Services Authority (OJK) has a plan to merge all of the BUMN Islamic

bank in order to maximize their business activities efficiently to get the higher market share.

Net Loans

Third Party Funds + Securities Issued by the Bank

X 100%

Total Financing

Third Party Funds

X 100%

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Based on the previous research, the researcher found that previous objectives as a basic

concept. Erika (2015) found that CAR, NPF and FDR partially have no significant effect

toward ROA while BOPO has partially significant effect toward ROA. Anggrainy (2011)

found that CAR, NIM, NPL, BOPO and LDR have significant impact toward ROA and NIM

has no significant impact on ROA. Kristiani & Yovin (2016) found that CAR, NIM, LDR

have positive significant effect toward ROA, Operational Efficiency has significant effect

toward ROA and NPL has negative significant effect toward ROA. See from the table 2.1 to

know more detail of some previous researches and the result.

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CHAPTER III

RESEARCH METHODOLOGY

3.1. Introduction

This chapter is designed to explain the research methodology that is used by the researcher

in this research. This chapter consists of the theoretical framework, hypothesis, and

operational definition of variables, instrument, and sampling.

3.2. Theoretical Framework

For conventional banks:

For Islamic banks:

CAR

(X1)

NPL

(X2)

LDR

(X3)

ROA

(Y)

CAR

(X1)

NPF

(X2)

FDR

(X3)

ROA

(Y)

Source: Adjusted by Author

Source: Adjusted by Author

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Internal factors is one of the main things to find the independent variables that significantly

influence toward Return on Assets in conventional and Islamic banks in Indonesia during

period 2011Q1-2016Q2. In this research uses three internal factors which are CAR,

NPL/NPF, and LDR/FDR.

3.3. Hypothesis

Based on the statement of problem and theoretical framework above, the hypothesis that

tested in this research can be stated as follows:

Hypothesis 1: CAR has significant effect toward ROA in conventional banks.

Hypothesis 2: NPL has significant effect toward ROA in conventional banks.

Hypothesis 3: LDR has significant effect toward ROA in conventional bank.

Hypothesis 4: CAR, NPL, LDR have simultaneous effect toward ROA in conventional

banks.

Hypothesis 5: CAR has significant effect toward ROA in Islamic banks.

Hypothesis 6: NPF has significant effect toward ROA in Islamic banks.

Hypothesis 7: FDR has significant effect toward ROA in Islamic banks.

Hypothesis 8: CAR, NPF, FDR have simultaneous effect toward ROA in Islamic banks.

3.4. Operational Definitions of Variables

The operational definitions can show how the variables is measured both dependent and

independent variables.

1. Return on Assets (ROA)

The dependent variable in this research is ROA. Return on Assets is a ratio that can

measured the ability of the bank to make profit (profit before taxes).

2. Capital Adequacy Ratio

CAR is the ratio of capital to risk weighted assets or aktiva asset tertimbang menurut

resiko (ATMR).

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3. Non-Performing Loan

NPL ratio indicates the risks of loan payment by the debtor (Kristani & Yovin, 2016).

According to Bank Indonesia Circular Letter No. 13/24/DPNP on October 25th 2011 the

total loans is loans to non-third party funds.

4. Loan to Deposit Ratio or Loan to Funding Ratio

LDR shows the ability of the bank to repay the withdrawal of funds by the depositor to

rely on loans as the source of liquidity. According to BI regulation No 17/11/PBI/2015

dated on June 25th 2015 LDR changed into LFR (Loan to Funding Ratio with the standard

78%-92%.

5. Non-Performing Financing

NPF is the ratio between Total Bad Debts to Total Financing.

6. Financing to Deposit Ratio

FDR can measure the banks growth in the term of financing and lending. According to

Bank Indonesia Circular Letter No. 12/11/DPNP/2010 standard of FDR ratio is between

85%-110%.

3.5. Instrument

In this research, researcher used the secondary data since it was very convenient and it save

time and cost. Secondary data refer to information gathered from sources that already exist

(Ariana, 2011). This research used SPSS 16.00 as an analysis tool. SPSS is common software

used to accomplish the research by establishing database and statistical data processing. This

statistical tool that used in this research were descriptive statistics test, classical assumption

test, (normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test),

multiple linear regression, and hypothesis test (f test, t test, coefficient multiple determination

test), group statistics test and independent sample test. By using SPSS as the statistical tools,

will help the researcher to establish the relationship between variables and help to present

the data. Besides, researcher also used Microsoft Excel 10 to help researcher to summarize

the data that covered the financial ratio.

3.6. Sampling

In this research, the population is taken from five conventional and five Islamic banks in

Indonesia that listed in Financial Services Authority of Indonesia (OJK). This research

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applies non-probability sampling with the focus on purposive sampling in order to achieve

the certain purpose of this research. The criteria for the purposive sampling are:

a. The five Conventional banks and five Islamic banks that published their report in OJK

and still running during period 2011Q1-2016Q2.

b. The availability of the financial statement position for period 2011Q1-2016Q2.

c. The conventional and Islamic banks is feasible to use based on their asset.

During this research, the data that used is secondary data in the form of financial ratios of

conventional and Islamic banks that published in OJK or that own website of each banks that

cover the period from 2011Q1-2016Q2. (See table 3.1 on appendixes about the banks

representative)

3.7. Data Analysis Method

3.7.1. Descriptive Statistics Analysis

This analysis can describe by the data by looking mean, standard deviation, maximum

and minimum. Mean is the average value of series, max and min are the maximum

and minimum values of the series in the current sample, std. deviation is a measure of

dispersion (Gujarati, 2004).

3.7.2. Assumption Classic Test

Data should fulfill classical assumption model in the regression analysis. It should be

passed in normality test, multicollinearity test, heteroscedasticity test and

autocorrelation test.

A. Normality Test

According to Ramadhan (2015), normality test is to determine whether the

independent variables and dependent variable has normal distribution or not.

By running SPSS 16.00 there will be several results one of them using graphs,

either in normal, plot and histogram graph. Normality test that used P-Plot will

form a diagonal line and the plotting data will compare with the diagonal line.

If the distribution of data is normal the line that represents the data will actually

follow the diagonal line.

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B. Multicollinearity Test

The purpose of multicollinearity test is to know the correlation between the

independent variables (Ghozali, 2007). A good result of regression model is

there is no relationship between the independent variables or free from

multicollinearity problems. Multicollinearity test shows the tolerance and VIF

(Variance Inflation Factor). A regression model result that has TOL ≥0.1 or

VIF <10.00 meaning that there is no multicollinearity problems that happened.

C. Heteroscedasticity Test

The purpose of heteroscedasticity test is to define whether the variance from

the residual of the observation variable is similar or not in the regression model

(Gujarati, 2004). A good result is there is no heteroscedasticity problem on the

research. It can show from the scatterplot between the value of dependent

variable (ZPRED) and the value of the residual (SRESID).

D. Autocorrelation Test

Autocorrelation is the correlation between error variable with another error

variable. The result of Durbin-Watson lower than -2 means that there is a

positive autocorrelation problem and higher that 2 means that there is a

negative autocorrelation problem (Singgih Santoso, 2009). So, it must around

-2 and +2 to conclude that the data has no autocorrelation problem.

3.7.3. Multiple Linear Regression

After the assumption classic test was completed and no problem happened thus it

complies the requirement to do multiple regression analysis and to do hypothesis

testing. The equation formula for multiple linear regressions is:

Y = a + βiX1 + βiiX2 + βiiiX3 + Ɛ

Where, for conventional banks:

Y = Return on Asset (ROA)

a = Constant

βi,ii,iii, = Coefficient of the regression

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X1 = Capital Adequacy Ratio (CAR)

X2 = Loan to Deposit Ratio (LDR)

X3 = Non-Performing Loan (NPL)

Ɛ = Error of Term

Where, for Islamic banks:

Y = Return on Asset (ROA)

a = Constant

βi,ii,iii, = Coefficient of the regression

X1 = Capital Adequacy Ratio (CAR)

X2 = Financing to Deposit Ratio (FDR)

X3 = Non-Performing Financing (NPF)

Ɛ = Error of Term

3.7.4. Hypothesis Testing

F-test and T-test will be used in this research to do a hypothesis testing. The purpose

of f test to define whether all independent variables have simultaneous influence

toward dependent variable. T test is to define whether each independent variable has

partial significant influence toward dependent variable.

A. Significant Simultaneous Test (F-Test)

Based on Alghozali (2005) F-test is to know whether every variable are

independent to be include in the model that have the influence of the dependent

variables against jointly bound. It will provide information whether there is

any influence of the independent variables against the dependent variable

simultaneously. F-test is performed by comparing the significance value of

Ftable and Fcount. The basic of making decision for this test are:

If Fcount ≤ Ftable, Ho accepted Ha rejected, for α ≥ 0.05

If Fcount ≥ Ftable, Ho rejected Ha accepted, for α ≤ 0.05

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Where, for conventional banks:

Ho: βi = βii = βiii = 0, CAR, LDR, NPL, do not give significant simultaneous

influence toward ROA.

Ha: at least one of βi ≠ βii ≠ βiii ≠ 0, CAR, LDR, NPL, have significant

simultaneous influence toward ROA.

Where, for Islamic banks:

Ho: βi = βii = βiii = 0, CAR, FDR, NPF, do not give significant simultaneous

influence toward ROA.

Ha: at least one of βi ≠ βii ≠ βiii ≠ 0, CAR, FDR, NPF, have significant

simultaneous influence toward ROA.

B. Significant Partial Test (T-Test)

The purpose of t test is to determine the partial influence of each independent

variable which are CAR, LDR and NPL toward ROA for conventional banks

and CAR, FDR, NPF toward ROA for Islamic banks. The formula of

hypotheses for this test is:

Conventional Banks:

If Ho1:βi= 0 or significance level > α, means that there is no significant

effect of CAR toward ROA.

If Ha1:βi ≠ 0 or significance level < α, means that there is significant effect

of CAR toward ROA.

If Ho2:βii= 0 or significance level > α, means that there is no significant

effect of LDR toward ROA.

If Ha2:βii ≠ 0 or significance level < α, means that there is significant effect

of LDR toward ROA.

If Ho3:βiii = 0 or significance level > α, means that there is no significant

effect of NPL toward ROA.

If Ha3:βiii ≠ 0 or significance level < α, means that there is significant effect

of NPL toward ROA.

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Islamic Banks:

If Ho1: βi= 0 or significance level > α, means that there is no significant

effect of CAR toward ROA.

If Ha1:βi ≠ 0 or significance level < α, means that there is significant effect

of CAR toward ROA.

If Ho2:βii = 0 or significance level > α, means that there is no significant

effect of FDR toward ROA.

If Ha2:βii ≠ 0 or significance level < α, means that there is significant effect

of FDR toward ROA.

If Ho3:βiii = 0 or significance level > α, means that there is no significant

effect of NPF toward ROA.

If Ha3:βiii ≠ 0 or significance level < α, means that there is significant effect

of NPF toward ROA.

Criteria for making decision for as follows:

If Tcount ≤ Ttable or significance level ≥ (α) 0.05, then Ho accepted Ha

rejected

If Tcount ≥ Ttable or significance level ≤ (α) 0.05, then Ho rejected Ha

accepted

C. Coefficient Multiple Determination Test (R2)

In order to measure the goodness of the regression equation r square and

adjusted r square can be as a defined. R2 is used if the independent variables is

less than two while if the independent variables have more than two, adjusted

R2 is used. It can indicates how far the independent variables used in the

regression equation which is able to explain a dependent variable (Gujarati,

2004). In order to overcome the problem it involves r square that has been

corrected called adjusted r square and will adjust if there is an additional

independent variable.

D. Group Statistics Result

This test will show the comparison average value between each variables in

conventional and Islamic banks to measure the ratio performance.

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E. Independent Sample Test

This test is to measure if there is a difference performance between

conventional and Islamic banks in Indonesia. In order to decide a decision for

the hypothesis of independent sample test, there are 2 basic decision that can

used:

1. If sig value of f test is > 0.05 Ho was accepted and Ha was rejected, the sig

value of t test is > 0.05.

2. If sig value of f test < 0.05 Ho was rejected and Ha was accepted, the sig

value of t test is < 0.05.

Where:

Ho: there is no significant different between variables in conventional and

Islamic banks

Ha: there is significant different between variables in conventional and Islamic

banks

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CHAPTER IV

RESULT AND DISCUSSION

In pursuance of the statement of problems and theoretical framework, to test the hypothesis, this

research used descriptive analysis and statistical analysis to interpret the data. The purposed of

descriptive analysis is to define the condition of the company from the data acquired by the

researcher. Statistical analysis is to calculate the data with the help of computer programs which

is SPSS 16.00 as statistical tool to run the data.

This chapter will discuss the descriptive analysis, classical assumption testing, hypothesis testing

and discussion.

4.1 Gathered Sampling Data

From the gathering data process, total data reaches 110 for Islamic Bank and 110 for

Conventional Bank, and total for both of it is 220. After the researcher do the first research

used the first data without outlier, the result is not valid from the normality and

heteroscedasticity test. Outlier is a cases that the data has a unique characteristics that look

very different from other observations data in the form of extreme in dependent or

independent variables. It overcomes by determining the limit values and categorized as a

data outlier and convert it into z score which has the standard score in between ≤2.5 and ≥-

2.5 (id thesis.com, AlGhozali 2007). In order to make the research valid from the secondary

data that has been collected, the researcher make the outlier data using SPSS 16.00

expectedly that the data can show the valid result.

4.2 Result of Data Analysis

4.2.1 Descriptive Statistics

Analysis for Conventional Bank in Indonesia period 2011Q1-2016Q2:

The purpose of descriptive table is to show the number of data (N), maximum and

minimum value of data, the average value (mean) and standard deviation of each

variable which are CAR, LDR, NPL and ROA can be seen from the table 4.1.

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The observation data of this research becomes 96 data after outlier that got from the

quarterly financial report of each bank samples of Bank Indonesia and Financial

Services Authority of Indonesia (OJK) report of period 2011Q1-2016Q2. The

information about each variable will describe below:

a. The average CAR is 21.6247% with the lowest value is CAR of Bank Artha Graha

International which only 9.67% during the period of Q2 in 2012 and the highest

value is CAR of Bank Multiarta Sentosa which reach 67.00% during the period Q3

in 2014. During the research period, the value of CAR fluctuated but it is consider

as good since it exceeds the minimum standard stated by Bank Indonesia which is

8%. The deviation of CAR is good because the standard deviation is 9.84996%

which is lower than the average value. CAR is one of the requirement to get FPJP

(Fasilitas Pendanaan Jangka Pendek) beside the bank must have a good high

quality of the collateral, the value of the collateral is good enough and meet the

capital according to the risk profile of the bank and based on the calculation of Bank

Indonesia. (BI Circular Letter No. 15/11/DPNP dated on April 3rd 2013).

b. The average LDR is 87.4251% with the lowest value is LDR of Bank ICBC

Indonesia which only 68.21% during the period of Q2 in 2011 and the highest value

is also LDR of Bank Mestika Dharma which reach 105.49% during the period of

Q2 in 2014. Averagely the value of LDR during the research period mostly are still

in the standard of Bank Indonesia which is ranging from 85%-110% (Bank

Indonesia Circular Letter No. 12/11/DPNP/2010) although the value of LDR

fluctuated during period of research. Changed according to BI regulation No

17/11/PBI/2015 dated on June 25th 2015 LDR changed into LFR (Loan to Funding

Ratio with the standard 78%-92%. The deviation of LDR is relatively good because

the standard deviation which is 7.9750% which lower that the average value.

c. The average of NPL is 1.3323% with the lowest value is NPL of Bank Multiarta

Sentosa which only 0.00 of Q1 in 2016 and 0.03 of Bank ICBC Indonesia during

the period of Q1 in 2013 and the highest value is NPL of Bank Nusantara

Parahyangan which reach 3.98% during period of Q4 in 2015. The standard NPL

from Bank Indonesia is less than 5% (Bank Indonesia Circular Letter No.

15/35/DPAU dated August 29th 2013). It shows the value of NPL during research

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period fluctuated but averagely NPL of those samples bank was classified as good

because it is still in the standard of BI regulation. If the NPL is exceeds than the

standard which mean is that several Islamic banks had credit risk problem. The

deviation of NPL is relatively good because the standard deviation which is

1.0464% lower than the average value 1.3323%.

Analysis for Islamic Bank in Indonesia period 2011Q1-2016Q2:

The observation data of this research is 95 data after outlier which got from the

quarterly financial report of each bank samples of Bank Indonesia and Financial

Service Authority of Indonesia (OJK) report of period 2011Q1-2016Q2. The

information about each variable is on table 4.2 and it will describe below:

a. The average CAR is 16.8787% with the lowest value is CAR of Bank BRI Syariah

which only 11.03% during the period of Q2 in 2015 and the highest value is CAR

of Bank Panin Syariah which reach 45.65% during the period Q2 in 2012. During

the research period, the value of CAR fluctuated but it is consider as good since it

exceeds the minimum standard stated by Bank Indonesia which is 8%. The

deviation of CAR is good because the standard deviation is 5.2817% which is lower

than the average value. CAR is one of the requirement to get FPJP (Fasilitas

Pendanaan Jangka Pendek) beside the bank must have a good high quality of the

collateral, the value of the collateral is good enough and meet the capital according

to the risk profile of the bank and based on the calculation of Bank Indonesia. (BI

Circular Letter No. 15/11/DPNP dated on April 3rd 2013).

b. The average FDR is 95.3636% with the lowest value is FDR of Bank BRI Syariah

which only 76.53% during the period of Q1 in 2011 and the highest value is also

FDR of Bank Panin Syariah which reach 127.88% during the period of Q2 in 2012.

Averagely the value of FDR during the research period mostly are still in the

standard of Bank Indonesia which is ranging from 85%-110% (Bank Indonesia

Circular Letter No. 12/11/DPNP/2010) although the value of FDR fluctuated

during period of research. The deviation of FDR is relatively good because the

standard deviation which is 9.8282% which lower that the average value.

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c. The average of NPF is 2.1073% with the lowest value is NPF of Bank Panin Syariah

which only 0.19 during the period of Q4 in 2012 and the highest value is NPF of

Bank Muamalat Indonesia which reach 4.61% during period of Q2 in 2016. The

standard NPF from Bank Indonesia is less than 5% (Bank Indonesia Circular Letter

No. 17/19/DPUM dated July 8th 2015). It shows the value of NPF during research

period fluctuated but averagely NPF of those samples bank was classified as good

because it is still in the standard of BI regulation. If the NPF is exceeds than the

standard which mean is that several Islamic banks had credit risk problem. The

deviation of NPF is relatively good because the standard deviation which is

1.0635% lower than the average value 2.1073%.

4.3 Assumption Classic Test Result

4.3.1 Normality Test

Based on the result the normal probability plot graphic and it shows the data spread

around the diagonal line or follow the direction of the diagonal stripe pattern which is

the data shows the normal distribution and the regression model meet the assumption of

normality. While for both conventional and Islamic of histogram graph result it shows

that the normal data distribution follows the curves and do not stay to the right or to the

left. It indicates the data has a normal distribution. The table is on the figure 4.1, 4.2,

4.3, 4.4.

4.3.2 Multicollinearity Test

In this research there are three independent variables which are CAR, FDR/LDR and

NPF/NPL. A regression model result that has TOL ≥0.1 or VIF <10.00 meaning that

there is no multicollinearity problems that happened. Based on the result (table 4.4 and

4.5). For conventional banks CAR has the value of TOL 0.941, LDR is 0.933, NPL is

0.969 and the value VIF value of CAR is 1.063, LDR is 1.072 and NPL is 1.032. While

for Islamic banks CAR has the value of TOL is 0.675, FDR is 0.828, NPF is 0.733 and

the VIF value of CAR is 1.481, FDR is 1.208 and NPF is 1.364. Both for conventional

and Islamic banks shows that each independent variables has TOL ≥0.1 and also has the

VIF value <10.00. Hence, in this research there is no multicollinearity problem. .

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4.3.3 Heteroscedasticity Test

Based on the scatterplot result (see on appendixes figure 4.5 and 4.6) the dots spread

randomly and scattered both below and above 0 in the Y axis.

4.3.4 Autocorrelation Test

It must around -2 and +2 to conclude that the data has no autocorrelation problem. The

table 4.6 and 4.7 will show the DW value of each in conventional and Islamic banks.

Because of the Durbin-Watson value is 0.417 for conventional and 0.680 for Islamic

which mean between -2 and 2 so there is no autocorrelation problem on the research

data.

4.4 Multiple Linear Regression

Based on the result of assumption classis test result it can conclude that the data on this

research has been distributed normally and there is no multicollinearity, heteroscedasticity, and

autocorrelation problems that happened. Thus it complies the requirement to do multiple

regression analysis and to do hypothesis testing (the result table is on appendixes table 4.8

and 4.9).

The result shows the multiple regression equation for conventional banks as follows:

Y = -4.938 + 0.035X1 + 0.066X2 + 0.078X3

1. Constant value for -4.938 shows that if there is no independent variables (CAR(X1=0),

LDR(X2=0) and NPL(X3=0)) the value of ROA(Y) will be -4.938.

2. β1 is 0.035 shows that every increasing of Capital Adequacy Ratio for 1% will follow

by increasing of ROA amounted 0.035, with estimates of other independent variables

is constant or not changes.

3. β2 is 0.066 shows that every increasing of Loan to Deposit Ratio for 1% will follow


is constant or not change.

4. β3 is 0.078 shows that every increasing of Non-Performing Loan for 1 % will follow


is constant or not change.

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While for the Islamic bank’s result:

Y = 1.586 + 0.007X1 + 0.004X2 – 0.369X3

1. Constant value for 1.586 shows that if there is no independent variables (CAR(X1=0),

FDR(X2=0) and NPF(X3=0)) the value of ROA(Y) will be 1.586.

2. β1 is 0.007 shows that every increasing of Capital Adequacy Ratio for 1% will follow


is constant or not changes.

3. β2 is 0.004 shows that every increasing of Financing to Deposit Ratio for 1% will

follow by increasing of ROA amounted 0.004, with estimates of other independent

variables is constant or not change.

4. β3 is -0.369 shows that every increasing of Non-Performing Financing for 1 % will

follow by decreasing of ROA amounted 0.369, with estimates of other independent

variables is constant or not change.

4.5 Hypothesis Testing

4.5.1 Significant Simultaneous Test (F-Test)

F-test is performed by comparing the significance value of Ftable and Fcount. The basic of

making decision for this test are:

If Fcount ≤ Ftable, Ho accepted Ha rejected, for α ≥ 0.05

If Fcount ≥ Ftable, Ho rejected Ha accepted, for α ≤ 0.05

Where:

Ho = there is no significant influence of independent variables toward dependent

variable

Ha = there is significant influence of independent variables toward dependent variable

Based on the (table 4.10 and 4.11) result, for conventional banks the f count > f table,

17.649>2.70 with the sig. value of f test is 0.000 which is <0.05 and for Islamic banks

the f count > f table, 9.758 > 2.70 with the sig. value of f test is 0.000 which is <0.05.

So the researcher can reject Ho and accept Ha for each conventional and Islamic banks.

It means all independent variables affect significantly toward dependent variable.

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4.5.2 Significant Partial Test (T-Test)

Based on the (table 4.12 and 4.13 on appendixes) test result, can be concluded that:

Table 4.14. Explanation of T-Test Result

Conventional Banks Islamic Banks

CAR :

Tcount = 3.490 > Ttable = 1.984 with the sig.

value 0.001 < 0.05 which means Ho was

rejected and Ha was accepted. CAR has

positive significant effect toward ROA

CAR:

Tcount = 0.384 < Ttable = 1.984 with the sig.

value 0.702 > 0.05 which means Ho was

accepted and Ha was rejected. CAR has

no significant effect toward ROA.

LDR:

Tcount = 5.313 > Ttable = 1.984 with the sig.

value 0.000 < 0.05 which means Ho was

rejected and Ha was accepted. LDR has

positive significant effect toward ROA.

FDR:



accepted and Ha was rejected. FDR has


NPL:



accepted and Ha was rejected. NPL has


NPF:

Tcount = -4.269 < Ttable = 1.984 with the

sig. value 0.000 < 0.05 which means Ho

was rejected and Ha was accepted. NPF

has negative significant effect toward

ROA.

Source: Adjusted by Author from the processing result of SPSS 16.00

4.5.3 Coefficient Multiple Determination Test (R2)

Based on the (table 4.15 and 4.16) result, the R2 of the model in conventional bank is

0.365 and adjusted R2 is 0.345. The result of adjusted R2 0.345 means 34.5% of

dependent variable (ROA) is explained by the combination of independent variables

which are CAR, LDR and NPL. The rest 65.5% is influenced by other factors outside

the research model. While for the R2 in Islamic banks is 0.243 and adjusted R2 is 0.218.

The result of adjusted R2 0.218 means 21.8% of dependent variable (ROA) is explained

by the combination of independent variables which are CAR, FDR and NPF. The rest

78.2% is influenced by other factors outside the research model.

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4.5.4 Group Statistics Result

See from table 4.17 which the results are:

1. CAR in Islamic banks has the value of mean is 16.8787% which is lower than

conventional banks which amount 21.6247%. It means that during the period of 2011-

2016Q2 conventional banks has a better CAR than Islamic banks since the higher of

CAR is the healthier of the bank. If refer to the BI regulation No. 10/15/PBI/2008,

article 2 paragraph 1 stated that Banks are required to provide a minimum capital of

8% of risk-weighted assets Islamic bank still in an ideal condition that has the value

of CAR above the minimum standard of BI.

2. FDR of Islamic banks is 95.3636% which is higher than conventional banks

87.4251% it means that during period 2011-2016Q2 Islamic bank has the better

financing. Both of conventional and Islamic banks is in the ideal position since it

fulfill the standard of BI regulation around 78%-92% for conventional and 85%-

110% for Islamic.

3. NPF in Islamic banks is 2.1073% which is higher than conventional 1.3323% means

that during period 2011-2016Q2 conventional banks healthier in the term of credit

risk problem than Islamic banks but both of it is still in the ideal condition around 5%

based on BI regulation.

4. ROA in Islamic banks is 1.2956% lower than conventional banks 1.7385%. It means

during period 2011-2016Q2 conventional banks has the better quality of profitability

or ROA than Islamic banks since the higher ROA the better quality of the profit.

Based on BI regulation No. 6/9/PBI/2004 a health condition of bank must have the

ROA >1.5% so Islamic banks is in the less ideal conditions.

4.5.5 Independent Sample Test

The test result in on table 4.18, as explanation:

Table 4.19. Explanation for Independent Sample Test

Variables

CAR F count = 25.820 sig value 0.000 < 0.05

Ho was rejected Ha was accepted.

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There is a different variance between Cbs

and Ibs.

Used the basic equal variance not

assumed for the t test.

T count = 4.156 sig value 0.000 < 0.05


There is significant different performance

between conventional and Islamic banks

if see from the ratio of CAR.

LDR or FDR F count = 1.419 sig value 0.235 > 0.05

Ho was accepted Ha was rejected.

There is no significant different of

variance between Cbs and Ibs.

T count = 6.133 sig value 0.000 < 0.05



between conventional banks and Islamic

banks if see from the ratio of LDR or FDR

NPL or NPF F count = 0.322 sig value = 0.571 > 0.05

Ho was accepted Ha was rejected.

There is no significant different of

variance between Cbs and Ibs.

T count = 5.076 sig value 0.000 < 0.05




banks if see from the ratio of NPL or NPF

ROA F count = 4.484 sig value = 0.036 < 0.05

Ho was rejected and Ha was accepted.

There is a different variance between Cbs

and Ibs.

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Used the basic equal variance not

assumed for the t test.

T count = 175.437 sig value = 0.003 <

0.05.




banks if seen from the ratio of ROA.

Source: Adjusted by Author from the processing result of SPSS 16.00

4.6 Interpretation of Result

There were several tests that have been conducted. This section will analyze the data result

and answer the hypotheses that researcher tries to answer by conducting this research. All of

the hypotheses used the multiple linear regression and below are the interpretation result of

this research:

4.6.1 The influence of Capital Adequacy Ratio toward the Return on Asset

CAR has positive significant effect toward ROA in conventional banks shows that it is

based on the theory. Capital Adequacy Ratio or CAR is the main capital that must to

meet by the bank. According to BI regulation in 2008 CAR is the ratio that shows how

far the assets that contain the risks (credit, issued securities, claim or bill at another bank)

have to be financed by the own capital of the bank besides the third party funds. CAR

is the ratio to measure the bank’s ability to maintain sufficient capital. Bank is to collect

funds and distribute back in the form of loan. If the bank has a good capital and meet

the requirements it is a possibility to create profit so the bank’s profit will increase

(Kristani & Yovin 2016). Bank Indonesia stated that the minimum value of its capital is

for 8% and it will considered as a healthy bank. CAR used as the independent variable

that influence ROA since it connected with the risk of the bank that will automatically

affect the profitability of the bank. If the higher ratio of CAR (based on BI regulation

standard minimum of CAR is 8%) which means that the bank can financed the operation

both in critical condition or not and will give a big contribution to the profitability of the

bank. If the bank has an enough capital in the critical situation, the bank will safe since

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the banks have a capital reserve in Bank Indonesia. This result is similar with previous

research conducted by Hardiyanti (2012) and Kristani & Yovin (2016). While in Islamic

banks CAR has no significant effect toward ROA since BI regulation stated that the

minimum standard of CAR is 8% so many Islamic banks sometimes add their capital

reserve by provide fresh money to anticipate the risk that can happen and a guarantee in

order to fulfill the regulation of BI. This result is similar with the previous research

conducted by Ramadhan (2015) and Hakim & Rafsanjani (2015). The more capital that

the banks have sometimes it hampers their business activity especially in Islamic banks

the profit is based on profit sharing not based on the interest and Islamic banks do not

maximize the capital in the business activity since the banks want to maintain their

minimum standard of CAR. Besides, if the higher ratio of CAR but lack of the

community trusts it will not affect to the ROA ratio. It can see from the report if the ratio

of CAR increase the ratio of ROA was not always increase. Bank sometimes invests

money carefully and more concern in the survival of the bank so CAR has not influence

toward the profitability of the bank. Based on the independent sample test, the

performance of conventional banks and Islamic banks in the term of the financial ratio

of CAR has significant different, CAR in conventional bank is better performance than

the Islamic banks.

4.6.2 The Influence of Loan to Deposit Ratio and Financing to Deposit Ratio toward

Return on Asset

LDR has positive significant effect toward ROA in conventional banks that shows the

ability of the bank to repay the withdrawal of funds by the depositor to rely on loans as

the source of liquidity. This research is similar with the previous that conducted by

Kristani & Yovin (2016) and Kuntari Dasih (2014). If the bank has the high number of

LDR but still in the standard of BI it can indicates that the more credit that the bank’s

distributed and will increase the profitability of interest. The higher ratio of LDR

meaning that the lower bank’s liquidity because it indicates that a bank lends most of its

funds but the lower ratio of LDR indicates that the banks do not give an efficient

distribution of credit. According to BI regulation No 17/11/PBI/2015 dated on June 25th

2015 LDR changed into LFR (Loan to Funding Ratio with the standard 78%-92%) and

it will used the securities issued in LFR. In the Islamic banks, FDR has no significant

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effect toward ROA it indicates the quality of financing. According to Bank Indonesia

Circular Letter No. 12/11/DPNP/2010 standard of FDR ratio is between 85%-110%. No

significant effect between FDR and ROA can caused by the financing that was not

optimal and not effective and lack of the circumspection principle by the management

of the bank. This result is similar with the previous research that conducted by

Widyaningrum & Septiarini (2015) and Suryani (2011). Based on the independent

sample t test, the performance of conventional banks and Islamic banks in the term of

LDR or FDR has significant different, LDR in Islamic banks has a better performance

than conventional banks.

4.6.3 The influence of Non-Performing Loan or Non-Performing Financing toward

ROA

NPL has no significant effect toward ROA. The lower ratio of bad debt the better

performance of the bank. Bank as an intermediary’s institution and also the media for

payment transaction. NPL ratio indicates the risks of loan payment by the debtor if there

is a problem of the debtor to pay, and it can decrease the bank’s profitability (Kristani

& Yovin 2016). The development of financial industry push the banks to do innovation

in the products and services that will affect to income of the bank not only rely on the

earning assets but also in fee base income such as the securities, invest the capital on

non-bank financial institutions or other company, and also the placement funds at the

other banks (Retnadi, 2006). This research similar with the previous that conducted by

Dasih (2014) and Sukarno (2016). While for Islamic banks, NPF has negative significant

effect toward ROA based on the theory the higher ratio of NPF will decrease the

profitability of the bank. According to Bank Indonesia Circular Letter No. 17/19/DPUM

dated July 8th 2015, standard of maximum NPF is to be 5% which means that if the ratio

of NPF is more than 5% the bank is indicated to have a credit risk problem. Banks will

be more concern with the credit risk since financing activity is the main thing of business

activities in Islamic banks. The negative sign means that the increasing of bad financing

will decreased the profitability of the bank. This result is similar with the previous that

conducted by Nugroho (2011) and Hayati et al (2010). Based on the independent sample

test, the performance of conventional banks and Islamic banks in the term of NPL or

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NPF has significant different, conventional banks that has the lower ratio of NPL is the

healthier bank’s performance than Islamic banks.

4.6.4 The influence of Capital Adequacy Ratio, Loan to Deposit Ratio/Financing to

Deposit Ratio and Non-Performing Loan/Non-Performing Financing toward Return

on Asset

CAR, LDR/FDR and NPL/NPF have simultaneous effect toward ROA both in

conventional and Islamic banks in Indonesia. It means all independent variables of this

research affect significantly toward dependent variable. The ratio of CAR, LDR/FDR

and NPL/NPF can explain the ratio of ROA in conventional and Islamic banks in

Indonesia. Besides, this result is empirical evidence that profitability of the banks is also

affected by external and internal factors. The change of all variables significantly

influence the change of profitability of the banks.

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CHAPTER V

CONCLUSION AND RECOMMENDATION

5.1 Conclusion

This research attempts to analyze the comparative study about the factors that influence

profitability between conventional banks and Islamic banks in Indonesia. It used ROA as the

dependent variables, CAR (Capital Adequacy Ratio), LDR/FDR (Loan to Deposit

Ratio/Financing to Deposit Ratio), and NPL/NPF (Non-Performing Loan/Non-Performing

Financing) as the independent variables. Based on multiple linear regression analysis, the

result as follows:

Conventional Banks:

a) CAR has positive significant effect toward ROA. It proves the roles of Capital Adequacy

Ratio is something that must be fulfilled by the bank which can help bank to face losses

that can be happened in order to maintain the bank’s activities run effectively and

efficiently to help increasing the profit that will impact to the financial performance of the

bank.

b) LDR has positive significant effect toward ROA. Based on to BI regulation No

17/11/PBI/2015 dated on June 25th 2015 LDR changed into LFR (Loan to Funding Ratio

with the standard 78%-92%). So the higher LFR but still keep in the healthy standard of

Bank Indonesia meaning that the bank distributed the credit optimally and with the big

amount of the third party funds that the banks can distribute to loans. With the growing of

loans granted will increase the profit of the bank and will gain a healthy financial

performance.

c) NPL has no significant effect toward ROA. It indicates the risks of loan payment by the

debtor if there is a problem of the debtor to pay, and it can decrease the bank’s profitability.

In this research the increasing of NPL will not decrease ROA since the provision of loans

losses can cover the bad debt problems.

d) Simultaneously, all of these independent variables have 0.000 level of significant with

0.345 Adjusted R Square. It means CAR, LDR, NPL having significant influence toward

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ROA by 34.5% the remaining 65.5% influenced by other factors outside the research

model.

Islamic Banks:

a) CAR has no significant effect toward ROA. Meaning that Islamic banks do not use capital

efficiently and effectively to do a business activity besides, the lack of community trust is

one of the factors that cause CAR in Islamic banks is not significant toward ROA.

b) FDR has no significant effect toward ROA it indicates the quality of financing. According

to Bank Indonesia Circular Letter No. 12/11/DPNP/2010 standard of FDR ratio is between

85%-110%. No significant effect between FDR and ROA can caused by the financing that

was not optimal and not effective and lack of the circumspection principle by the

management of the bank especially in Islamic banks the profit that will get by the bank is

not from the interest fee but from the profit sharing.

c) While NPF has negative significant effect toward ROA based on the theory the higher

number of NPF will decrease the profitability of the bank so the lower ratio is the better

performance of the bank.

d) Simultaneously, all of these independent variables have 0.000 level of significant with

0.218 Adjusted R. It means CAR, FDR, NPF having significant influence toward ROA

toward ROA by 21.8% the remaining 78.2 % influenced by other factors outside the

research model.

5.2 Recommendation

From the conclusion the researcher can give some recommendation for some parties that can

be useful, which are:

a) Need to give more concerned for Islamic bank to compete with the conventional banks.

Focus and be careful to search the opportunities to push the high number of third party

funds so the optimal financing can happen efficiently and effectively.

b) Islamic banks can duplicate the strategy of conventional banks but still in the syariah

principle.

c) Conventional banks still keep improving to be a better performance and compete in

Indonesia or international by maintain the public trust and investor trust.

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d) For further research, the researcher recommends conducting both for internal and external

factors that influenced ROA in conventional and Islamic banks so the most significance

factors can be shown either in internal or external factors.

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APPENDIX

Table 2.1. for Research Gaps

No Researcher Research’s Title Methodology Result and Conclusion

1 Erika (2015) Financial Ratio

and Its Influence

to Profitability in

Islamic Banks

Multiple

Regression

Analysis

CAR, NPF, FDR, BOPO

simultaneously effect to

ROA. CAR, NPF and FDR

partially no significant effect

to ROA while BOPO

partially significant effect to

ROA.

2 Anggrainy

(2011)

Analysis of CAR,

NPL, BOPO,

NIM and LDR

toward ROA in

Commercial

Banks that listed

in IDX period

2005-2009

Multiple

Regression

Analysis

CAR, NIM, NPL, BOPO,

and LDR have significant

impact on ROA while NIM

have no significant impact on

ROA

3 Kristiani,

Yovin (2016)

Factors Affecting

Bank

Performance:

Cases of Top 10

Biggest

Government and

Private Banks in

Indonesia in

2004-2013

Multiple

Linear

Analysis

CAR has positive significant

effect toward ROA.

Operational efficiency has a

significant negative impact

on ROA. NIM has a

significant positive impact on

ROA. NPL has negative

significant effect toward

ROA. LDR has a significant

positive impact on ROA.

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Table 3.1. List of Banks that used (in million)

Conventional Bank Islamic Bank

Name of Banks Total Asset Name of Banks Total Asset

PT Bank ICBC Rp46,137,643 PT Bank Muamalat Indonesia Rp52, 695.732

PT Bank Artha Graha Rp26,639,793 PT Bank BNI Syariah Rp26,676,278

PT Bank Mestika Dharma Rp10,415,916 PT Bank BRI Syariah Rp24,953,941

PT Bank Multiarta Sentosa Rp5,784,800 PT Bank Panin Dubai Syariah Rp7,770,955

PT Bank Nusantara Parahyangan Rp8,382,818 PT Bank Mega Syariah Rp5,478,501

Source: OJK websites and each banks website

Table 4.1. Sampling Data

Conventional Banks Islamic Banks

No Variable Period Basis Data

1 CAR March

2011-

June

2016

Quarterly 110

2 LDR March

2011-

June

2016

Quarterly 110

3 NPL March

2011-

June

2016

Quarterly 110

4 ROA March

2011-

June

2016

Quarterly 110

No Variable Period Basis Data

1 CAR March

2011-

June

2016

Quarterly 110

2 FDR March

2011-

June

2016

Quarterly 110

3 NPF March

2011-

June

2016

Quarterly 110

4 ROA March

2011-

June

2016

Quarterly 110

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Table 4.2. Descriptive Data for Conventional Banks

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

CAR 96 9.67 67.00 21.6247 9.84996

LDR 96 68.21 105.49 87.4251 7.97503

NPL 96 .00 3.98 1.3323 1.04636

ROA 96 .16 5.44 1.7385 1.16028

Valid N (listwise) 96

Source: Processing result on secondary data (SPSS 16.0)

Table 4.3. Descriptive Data for Islamic Banks

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

CAR 95 11.03 45.65 16.8787 5.28174

FDR 95 76.53 127.88 95.3636 9.82823

NPF 95 .19 4.61 2.1073 1.06354

ROA 95 -.73 3.57 1.2956 .86253

Valid N (listwise) 95


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Table 4.4. Multicollinearity Test for Conventional Banks

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig.

Collinearity Statistics

B Std. Error Beta Tolerance VIF

1 (Constant) -4.938 1.061 -4.654 .000

CAR .035 .010 .299 3.490 .001 .941 1.063

LDR .066 .013 .457 5.313 .000 .933 1.072

NPL .078 .094 .070 .835 .406 .969 1.032

a. Dependent Variable: ROA


Table 4.5. Multicollinearity Test for Islamic Banks

Coefficientsa

Model


Standardized

Coefficients

t Sig.



1 (Constant) 1.586 .875 1.812 .073

CAR .007 .018 .043 .384 .702 .675 1.481

FDR .004 .009 .044 .440 .661 .828 1.208

NPF -.369 .086 -.455 -4.269 .000 .733 1.364



Table 4.6. Durbin-Watson Result for Conventional Banks

Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate Durbin-Watson

1 .604a .365 .345 .93933 .417

a. Predictors: (Constant), NPL, CAR, LDR

b. Dependent Variable: ROA


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Table 4.7. Durbin-Watson Result for Islamic Banks

Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of the


1 .493a .243 .218 .76252 .680

a. Predictors: (Constant), NPF, FDR, CAR



Table 4.8. Multiple Linear Regression Result for Conventional Banks

Coefficientsa

Model


Standardized

Coefficients

t Sig.



1 (Constant) -4.938 1.061 -4.654 .000

CAR .035 .010 .299 3.490 .001 .941 1.063

LDR .066 .013 .457 5.313 .000 .933 1.072

NPL .078 .094 .070 .835 .406 .969 1.032



Table 4.9. Multiple Linear Regression Result for Islamic Banks

Coefficientsa

Model


Standardized

Coefficients

t Sig.



1 (Constant) 1.586 .875 1.812 .073

CAR .007 .018 .043 .384 .702 .675 1.481

FDR .004 .009 .044 .440 .661 .828 1.208

NPF -.369 .086 -.455 -4.269 .000 .733 1.364



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Table 4.10. Simultaneous Result for Conventional Banks

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 46.718 3 15.573 17.649 .000a

Residual 81.176 92 .882

Total 127.894 95




Table 4.11. Simultaneous Result for Islamic Banks

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 17.021 3 5.674 9.758 .000a

Residual 52.911 91 .581

Total 69.932 94




Table 4.12. Significant Partial Test Result of Conventional Banks

Coefficientsa

Model


Standardized

Coefficients

t Sig.



1 (Constant) -4.938 1.061 -4.654 .000

CAR .035 .010 .299 3.490 .001 .941 1.063

LDR .066 .013 .457 5.313 .000 .933 1.072

NPL .078 .094 .070 .835 .406 .969 1.032



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Table 4.13. Significant Partial Test Result of Islamic Banks

Coefficientsa

Model


Standardized

Coefficients

t Sig.



1 (Constant) 1.586 .875 1.812 .073

CAR .007 .018 .043 .384 .702 .675 1.481

FDR .004 .009 .044 .440 .661 .828 1.208

NPF -.369 .086 -.455 -4.269 .000 .733 1.364



Table 4.15. Coefficient Multiple Determination Test Result for Conventional Banks

Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of the


1 .604a .365 .345 .93933 .417




Table 4.16. Coefficient Multiple Determination Test Result for Islamic Banks

Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of the


1 .493a .243 .218 .76252 .680




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Table 4.17. Group Statistics Test Result

Group Statistics

GROUP N Mean Std. Deviation Std. Error Mean

CAR Conventional Banks 96 21.6247 9.84996 1.00531

Islamic Banks 95 16.8787 5.28174 .54190

LDRorFDR Conventional Banks 96 87.4251 7.97503 .81395

Islamic Banks 95 95.3636 9.82823 1.00835

NPLorNPF Conventional Banks 96 1.3323 1.04636 .10679

Islamic Banks 95 2.1073 1.06354 .10912

ROA Conventional Banks 96 1.7385 1.16028 .11842

Islamic Banks 95 1.2956 .86253 .08849


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Table 4.18. Independent Sample Test Result

Levene's Test for

Equality of

Variances t-test for Equality of Means

F Sig. t df

Sig. (2-

tailed)

Mean

Difference

Std. Error

Difference

95% Confidence

Interval of the

Difference

Lower Upper

CAR Equal variances

assumed 25.820 .000 4.144 189 .000 4.74595 1.14539 2.48656 7.00534

Equal variances

not assumed

4.156 145.787 .000 4.74595 1.14206 2.48882 7.00308

LDRorFDR Equal variances

assumed 1.419 .235

-

6.133 189 .000 -7.93847 1.29447

-

10.49194 -5.38501

Equal variances

not assumed

-

6.126 180.556 .000 -7.93847 1.29587

-

10.49548 -5.38147

NPLorNPF Equal variances

assumed .322 .571

-

5.076 189 .000 -.77497 .15267 -1.07612 -.47382

Equal variances

not assumed

-

5.076 188.864 .000 -.77497 .15268 -1.07615 -.47379

ROA Equal variances

assumed 4.484 .036 2.992 189 .003 .44296 .14806 .15091 .73502

Equal variances

not assumed

2.996 175.437 .003 .44296 .14783 .15120 .73472


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Figure 4.1. Histogram for Conventional Banks


Figure 4.2. Histogram for Islamic Banks

Source: Processing result on secondary data (SPSS 16.0

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Figure 4.3. P-Plot for Conventional Banks


Figure 4.4. P-Plot for Islamic Banks


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Figure 4.5. Scatterplot Result for Conventional Banks


Figure 4.6. Scatterplot for Islamic Banks


the profitab ility determinants of conventional …

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