THE EFFECT OF CAPITAL ADEQUACY, OPERATIONAL EFFICIENCY, AND THIRD-PARTY FUNDS ON PROFITABILITY IN SHARIA COMMERCIAL BANKS IN INDONESIA
Abstract
This study aims to analyze the effect of Capital Adequacy Ratio (CAR), Operating Costs to Operating Income (BOPO), and Third Party Funds (DPK) on Return on Assets (ROA) in Sharia Commercial Banks in Indonesia. This study uses an associative quantitative approach with secondary data on the monthly time series for the 2018–2024 period sourced from the Financial Services Authority (OJK). The analysis method used is the Vector Error Correction Model (VECM), with stages of testing stationery, optimal lag, VAR stability, Granger causality, and Johansen cointegration, and equipped with Impulse Response Function (IRF) and Forecast Error Variance Decomposition (FEVD) analysis. The results of the study showed that some variables were not stationary at the level level, but all variables were stationary at the first difference. The Johansen cointegration test showed that there was a long-term relationship between variables, so the VECM model was feasible. The estimated results show that CAR does not have a significant effect on ROA in the short term. BOPO has a negative and significant effect on ROA in the short term, while deposits also have a negative and significant effect on ROA. The IRF results show that the ROA response to shock is temporary, while the FEVD shows that the variation in ROA is more explained by the ROA shock itself. This finding indicates that the profitability of Sharia Commercial Banks is more influenced by operational efficiency and optimization of fund management than capital adequacy alone.
Downloads
References
Abdul Karim, M., Hassan, M. K., Hassan, T., & Mohamad, S. (2014). Capital adequacy and lending and deposit behaviors of conventional and Islamic banks. Pacific-Basin Finance Journal, 28, 58–75. https://doi.org/https://doi.org/10.1016/j.pacfin.2013.11.002
Ahmed, I., Farooq, W., & Khan, T. I. (2021). Customers’ perceptions and their responses to objectives of islamic banks - A three-wave investigation. Asian Economic and Financial Review, 11(1), 43–56. https://doi.org/10.18488/JOURNAL.AEFR.2021.111.43.56
Akttausyaniah, N., & Hidayat, R. M. (n.d.). THE INFLUENCE OF SHARIA FINTECH ON THE DEVELOPMENT OF INVESTMENT IN THE SHARIA CAPITAL MARKET (REVIEW OF SHARIA MUTUAL FUNDS). https://www.bps.go.id/
Almazari, A. A. (2014). Impact of Internal Factors on Bank Profitability: Comparative Study between Saudi Arabia and Jordan. In Journal of Applied Finance & Banking (Vol. 4, Issue 1). Scienpress Ltd.
Chowdhury, M. A. M., & Haron, R. (2021). The efficiency of Islamic Banks in the Southeast Asia (SEA) Region. Future Business Journal, 7(1), 16. https://doi.org/10.1186/s43093-021-00062-z
Islamic Economics and Business, J., Dona Pertiwi, T., Farokhah Kholison, R., & Rusgianto, S. (2024). Factors Determining Profitability with the Role of Capital Adequacy as Intervening in Islamic Banks. In Journal of Islamic Economics and Business (Vol. 7, Issue 2). https://journal.unesa.ac.id/index.php/jei
Faiza Khansa, J., Nissa Zahra, S., Accounting Studies, P., Economics and Business, F., & Correspondence, P. (2023). Determination of Profitability in Islamic Financial Institutions: A Literature Review. Journal of Information Systems, Accounting and Management, 3(3).
Hosen, M. N., & Rahmawati, R. (2014). (n.d.).
Kurniawati, L. (2025). (n.d.).
Louati, S., Gargouri Abida, I., & Boujelbene, Y. (2015). Capital adequacy implications on Islamic and non-Islamic bank’s behavior: Does market power matter? Borsa Istanbul Review, 15(3), 192–204. https://doi.org/https://doi.org/10.1016/j.bir.2015.04.001
Mawardi, I., Al Mustofa, M. U., Widiastuti, T., & Wahid, W. W. (2023). Early warning systems in Indonesian Islamic banks: A comparison of Islamic commercial and rural banks. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2172803
Meero, A. (2025). Islamic vs. Conventional Banking in the Age of FinTech and AI: Evolving Business Models, Efficiency, and Stability (2020–2024). International Journal of Financial Studies, 13(3). https://doi.org/10.3390/ijfs13030148
Millah, H., Najiyah, S., & Novitasari, K. (2025). The Strategy for the Development of Sharia Economy in Indonesia has become the Center of the World Sharia Economy. Journal of Accounting, Management, Economics, and Business (ANALYSIS), 3(1), 28–37. https://doi.org/10.56855/analysis.v3i1.1263
Muhajil, A., & Azhar, Z. (2024a). The Role and Challenges of Islamic Banking in the Global Financial System. JIMMI: Scientific Journal of Multidisciplinary Students, 1 (February), 13–23. https://jurnal.fanshurinstitute.org/index.php/jimmi
Muhajil, A., & Azhar, Z. (2024b). The Role and Challenges of Islamic Banking in the Global Financial System. JIMMI: Scientific Journal of Multidisciplinary Students, 1 (February), 13–23. https://jurnal.fanshurinstitute.org/index.php/jimmi
Mukti, R. I. (2025). (n.d.).
Muljawan, D., Dar, H. A., & Hall, M. J. B. (2004). A capital adequacy framework for Islamic banks: the need to reconcile depositors’ risk aversion with managers’ risk taking. Applied Financial Economics, 14(6), 429–441. https://doi.org/10.1080/9603100410001673667
Najib Azzamani, A. (2024a). Towards the Economic Welfare of Muslims: The Strategic Role of Islamic Financial System Development. EKOMA : Journal of Economics, 3(5).
Najib Azzamani, A. (2024b). Towards the Economic Welfare of Muslims: The Strategic Role of Islamic Financial System Development. EKOMA : Journal of Economics, 3(5).
Nugroho, W., Silaen, M., & Parhusip, A. (2024). OPTIMIZATION OF RETURN ON ASSET (ROA) AND RETURN ON EQUITY (ROE) TO INCREASE BANKING COMPETITIVENESS ON THE STOCK EXCHANGE (Vol. 1, Issue 4). Electronics.
Pradana, T., Nur Diana, I., & Rofiq, & A. (2022). THE EFFECT OF THIRD PARTY FUNDS ON THE PROFITABILITY OF ISLAMIC COMMERCIAL BANKS IN INDONESIA. Jurnal Tabarru’ : Islamic Banking and Finance, 5(1).
Pusvisasari, L., Bisri, H., & Suntana, I. (2023). Analysis of Sharia Economic Law Philosophy and Theory in the Context of Sharia Banking. Journal of Major Economics, 2(3), 269–277. https://doi.org/10.55903/juria.v2i3.125
Sopian, A. J., Ismal, R., & Haryono, Y. (2023). Analysis and Estimation of the Performance of Sharia Commercial Banks Before and During the Covid-19 Pandemic. IJIEB: Indonesian Journal of Islamic Economics and Business, 8(2), 345–364. http://e-journal.lp2m.uinjambi.ac.id/ojp/index.php/ijoieb
Srairi, S. A. (2010). Cost and profit efficiency of conventional and Islamic banks in GCC countries. Journal of Productivity Analysis, 34(1), 45–62. https://doi.org/10.1007/s11123-009-0161-7
Sutrisno, S., & Widarjono, A. (2024). Determinants of capital buffer in Islamic banks: the lesson from Indonesia. Cogent Business & Management, 11(1), 2331707. https://doi.org/10.1080/23311975.2024.2331707
Widarjono, A. (2018). Estimating Profitability of Islamic Banking in Indonesia. Journal of Finance and Banking, 22(3). https://doi.org/10.26905/jkdp.v22i3.2197
Zuhroh, I., Aksari Anindyntha, F., & Rusdianasari, F. (2025). INTEGRATION OF MACROPRUDENTIAL AND MONETARY POLICIES TOWARDS THE RESILIENCE OF ISLAMIC BANKS IN INDONESIA. In Journal of Financial Economics & Investment (Vol. 5, Issue 1).
Copyright (c) 2026 Putri Diah Salsabillah, Haqiqi Rafsanjani, Tiara Anindya Virana
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
