The Effect of Ratio of Financing to MSMEs and CAR to ROA on Islamic Banks

Authors

  • Nadzwa Amalia Lutvi Department of Economics Development, Ahmad Dahlan University, Indonesia
  • Kartika Monica Department of Economics Development, Ahmad Dahlan University, Indonesia
  • Ellyana Wahyu Octaviani Department of Economics Development, Ahmad Dahlan University, Indonesia

Abstract

The role of MSMEs is very crucial in the domestic economy. During the 1998 crisis, MSMEs became the key to economic growth because they could help the domestic economy recover. The growth of MSMEs after the Covid-19 crisis is starting to show an upward trend. The growth of MSMEs can be an opportunity for sharia banking as a place to channel financing and can be a threat because financing in the micro sector can pose a risk of bad credit. Sharia banking profitability must be the goal amidst the high risk of default, this is an initial mitigation of the types of risks that can impact sharia banking. This research aims to analyze the influence of the financing ratio channeled to the real sector through MSMEs and sharia banking capital adequacy on sharia banking businesses earning profits from assets managed. The research uses time-series data and the Ordinary Least Square (OLS) method. The research results show that financing channeled to the real sector through MSMEs and capital adequacy play an important role in sharia banking in gaining profits from managed assets. The implication of the research is that stricter supervision is needed in channeling financing to the micro sector while still adhering to sharia principles in helping to improve micro, small and medium enterprises. Keywords:Financing Ratio to MSMEs, CAR, ROA, OLS.

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Published

2024-12-19

How to Cite

Amalia Lutvi, N. ., Monica, K., & Wahyu Octaviani, E. . (2024). The Effect of Ratio of Financing to MSMEs and CAR to ROA on Islamic Banks. Proceedings of Femfest International Conference on Economics, Management, and Business, 2(2), 126–133. Retrieved from https://ejournal.unida.gontor.ac.id/index.php/FICCOMSS/article/view/13403

Issue

Vol. 2 No. 2 (2024): Special Issue, The Proceeding of International Conference on Islamic Human Resources Management

Section

Articles