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Archives of Business Review – Vol. 9, No.1
Publication Date: January 25, 2021
DOI: 10.14738/abr.91.9638.
Murni, S., Sabijono, H., Trang, I., & Mangantar, M. (2021). Financial Performance And Company Value of Shariah Banking In Indonesia
.Archives of Business Research, 9(1). 163-181.
Financial Performance And Company Value of Shariah Banking In
Indonesia
Sri Murni
Sam Ratulangi University, Faulty of economics and Business, Indonasia
Harijanto Sabijono
Sam Ratulangi University, Faulty of economics and Business, Indonasia
Irvan Trang
Sam Ratulangi University, Faulty of economics and Business, Indonasia
Maryam Mangantar
Sam Ratulangi University, Faulty of economics and Business, Indonasia
ABSTRACT
This research aims to understand the influence of CAR, FDR, NPF, and
ROA to the Company Value of Shariah Banking in Indonesia. The study
is done at the Indonesian Stock Exchange and Shariah Banking in
Indonesia. The research object on the company financial report
shariah banks in the form of financial reports the period of 2014 –
2019 is loaded in the Indonesian Capital Markets Directory as well as
data originating from IDX, ICMD, and annual report. To test the
hypotheses of variable X and variable Y simultaneously using the F,
while based on partial use t. The data used was secondary data. In this
research used time series data and cross section (pooling data), and
based on the criteria, the number of sample which satisfies the
criteria of as many as 8 shariah banks of 12 shariah banking as the
population. The result showed that simultaneously CAR, FDR, NPF and
ROA have significant impact on the company value. In partial CAR and
ROA on this fact have a positive and significant on the company value,
NPF have a negative and significant on the company value, and FDR
have an insignificant for the company value. The result is expected to
be a valuable input especially for investors as consideration in
decision making of investing; also for the company management is
expected to be a consideration in this matter, in addition, the result of
this research can be an important reference to the similar research for
the benefit of applied and science development.
Keywords: CAR, FDR, NPF, ROA, Company Value
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Murni, S., Sabijono, H., Trang, I., & Mangantar, M. (2021). Financial Performance And Company Value of Shariah Banking In Indonesia .Archives of
Business Research, 9(1). 163-181.
URL: http://dx.doi.org/10.14738/abr.91.9638. 164
INTRODUCTION
The background of Research Problem
The business activity of shariah banking was essentially an expansion of banking services for
people who need and would seek payment of reward that is not based on interest system, but on
the base of the shariah principle as laid down in Islamic shariah. The application of shariah
banking system is set to be expanding the constitution and furnish the products and the banking
services that exist. The existence of shariah banking system that would help meet the needs of
some communities that are not willing to take advantage of conventional banks services because
the principle of confidence and trust. Basically the products of shariah banking are universal not
only for a group of a particular society, although the operation principle of the shariah banks is
based on Islamic shariah.
According to statistic data published by Bank Indonesia in 2012, national shariah banking has
increased in the volume of business which consists of total assets, the third party funds, and the
total distributed financing. To maintain the public trust, the banks should consider the financial
performance. Banking financial performance was an image of the financial condition of a bank in
a specified period, includes the aspects of fundraising or the distribution of fund. One of the
indicators to assess the bank financial performance is seeing the company value. The higher value
of a bank company, the bank performance will be better. The company can be seen from the
amount of the company paid dividends. The dividends will affect share prices. If a dividend paid
high, and share prices tend to be high that, so the company value also high (Harjito and Martono,
2015). The company value can confer the maximum prosperity of shareholders when stock price
increase.
A bank financial condition is the interests of all parties included the owner, bank management,
bank users, Bank Indonesia as banking supervision authority and other parties. To see the
average performance development shariah banks in Indonesia is on the figure below.
Figure 1.1
Sources: Indonesian Statistic Banking, 2019 data processed
2 2.85 19.57 2.6 89.42
1.4
2.32 21.39 2.58 92.11
2.12
2.36 22.57 2.45 90.43
2.71 2.6 23.21 2.59 94.12
0%
20%
40%
60%
80%
100%
PRICE BOOK
VALUE (PBV)
RETURN ON
ASSET (ROA)
CAPITAL
ADEQUACY
RATIO (CAR)
NON
PERFORMING
FINANCING
(NPF)
FINANCING TO
DEPOSIT RATIO
(FDR)
THE AVERAGE DEVELOPMENT OF FINANCIAL PERFORMANCE
SHARIAH BANK IN INDONESIA
2014- 2017
2014 2015 2016 2017
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Archives of Business Research (ABR) Vol 9, Issue 1, January-2021
Capital Adequacy Ratio (CAR) every year since 2014 until 2017 shows the rises trend, this
indicates that shariah banks in Indonesia has shown a good performance. CAR will be healthy if
the bank having the CAR ratio at least 8%. Non Performing Financing (NPF) reflect the
performance of the banks in credit distribution, the lower value of NPF of the bank, the
performance of the banks will be better and the loan defaults is small or low. Financing to Deposit
Ratio (FDR) is the comparison between the amounts of loans with the third party fund collected
by the bank. The FDR are good to be around 110% (Kasmir, 2014). Return on Asset (ROA)
providing information on how efficiently a bank in conducting business activities, because this
ratio indicates how big an advantage can be obtained on average every rupiah assets (Siamat,
2005), but in fact financial performance was not always reflected by this ratio is directly
proportional to price book value, due to external factors such as market sentiment, the condition
of the economy, government policy and others.
The research result of Zulifiah (2014), said that Capital Adequacy Ratio (CAR), non-performing
financing (NPF) have an impact on profitability shariah commercial banks. Ummah and Suprapto
(2015) said that FDR have a negative influence on profitability. CAR and NPL will not affect the
profitability. Zakchona (2016), stated that CAR, NPL, ROA, LDR, ratios have significant and
positive impacts on expected return by simultaneous equation model. In partial equation model,
CAR, NPL, and ROA ratios have not significant and have positive impacts on expected return. LDR
ratios have significant and negative impacts on expected return. Mazreku (2018), based on panel
data analysis, it is noted that specific factors, specifically, capital adequacy, non-performing loan,
significantly affect bank liquidity. Alamsyah and Latief (2019), the results of this study indicate
that CAR and NPF variables have no significant on ROA The results of the investigation provides
information that CAR has increased every year, which indicating that would be followed by the
PBV, but what happens is PBV fluctuate, similarly NPF.
Formulation of the Problem
From the background explanation, the problem in this research is how the influence of CAR, FDR,
NPF, ROA to the Shariah Banking Company Value in Indonesia by partial and simultaneous.
THEORETICAL REVIEW
Company Value
Maximize the value of a company is a purpose which is relevant in this era of a tight competition.
The company value is investor perception to the level of success, often associated with company
stock price. High stock prices make the company value also high, and increase market confidence
not only for the company now but also on the prospects for companies in the future. Maximize
the company value is very important for a company, because to maximize the company value
means also maximize the main purpose of company (Harjito and Martono, 2015). The increase of
the company value is an achievement according to the hope of the owner, because with the
increasing of the company value, the welfare of the owners is increased. According to Sartono
(2010), company value is selling price a company as a business that was working.
Presence of excess sales value above the liquidation is the value of the management that runs the
company. According to Harmono (2014), company value is the performance of a company
reflected by stock price formed by demand and supply stock market reflects the people judgment
on the performance of the company. Atmaja (2003), said the company value are the condition