DETERMINANTS OF ISLAMIC BANK PERFORMANCE IN INDONESIA

Islamic banking industry in Indonesia still has limited market share, around 6.52% of the total market share
of the banking industry, while the conventional bank is 93.48% at the end of 2021. This study aims to
determine the factors that influence Islamic Bank Performance in Indonesia. This study adopts quantitative
methods where secondary data was collected from the annual Islamic Banking financial statements for the
period 2017 to 2021 obtained directly from the official website of each bank and Indonesia Financial
Services Authority. The data collected was analyze using SPSS. The results of regression analysis indicate
that asset quality and liquidity significantly leads to the negative Islamic bank’s performance of ROA,
whereas capital adequacy positively contributes to the Islamic bank’s performance of ROA. Unfortunately,
the findings reveal that gross domestic product and inflation have no association with Islamic bank’s
performance. This research also includes a discussion, limitations, recommendations and conclusion.