Profitability Determinants of Islamic Banks in Indonesia: The Role of Foreign Ownership

Nunuk Puspa Endrajati; Anggraeni Anggraeni

doi:10.24912/je.v30i2.3136

Authors

Nunuk Puspa Endrajati Study Program of Management, Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Surabaya
Anggraeni Anggraeni Study Program of Management, Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Surabaya

DOI:

https://doi.org/10.24912/je.v30i2.3136

Keywords: Credit Risk; Efficiency; Islamic banks; Profitability.

Abstract

This study investigates how operational efficiency influences the profitability of Islamic banks in Indonesia, with a specific focus on the moderating role of foreign ownership. Using a quantitative explanatory design, the research applies multiple linear regression on secondary data from 2020 to 2024. Variables analyzed include NPF, FDR, BOPO, Bank Size, and the interaction term BOPO × Foreign. The results show that NPF, BOPO, and Bank Size negatively affect ROA, while FDR shows a positive influence. Additionally, foreign ownership significantly moderates the relationship between BOPO and profitability, amplifying the negative impact of inefficiency. These findings suggest that cost control becomes more critical in banks with foreign participation. The model demonstrates strong explanatory power, with R² reaching 88.8 percent. The study contributes to understanding performance drivers in Islamic finance and highlights the need for strategic alignment and efficiency in banks with international ownership.

Author Biographies

Nunuk Puspa Endrajati, Study Program of Management, Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Surabaya

nunukpuspa15@gmail.com

Anggraeni Anggraeni, Study Program of Management, Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Surabaya

anggi@perbanas.ac.id

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