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Optimizing Performance: A Dynamic Analysis of Credit Quality, Operational Efficiency, and Their Influence on ROA in Indonesian Islamic Banks

Jihbiz: Global Journal of Islamic Banking and Finance · Vol. 7 No. 2 (2025) · hlm. 273–299

DOI
10.22373/cz9qkp11
ISSN
2684-8554
Terbit
2025-08-19
Penerbit
Program Studi Perbankan Syariah FEBIII UIN Ar-Raniry
Bahasa
eng
Lisensi
creativecommons.org/licenses/by-sa/4.0

Abstrak

ABSTRACT This study investigates the influence of key financial management strategies on the Return on Assets (ROA) of Islamic Commercial Banks (ICBs) in Indonesia. The analysis explores the direct and indirect effects of Funding Deposit Ratio (FDR) and Non-Performing Financing (NPF) on ROA, with Operational Costs to Operational Income (BOPO) as a mediating variable. The findings reveal a significant influence of FDR on ICB performance. While a higher FDR leads to lower operational costs, it might also be associated with lower profitability due to deposit interest rates. ICBs need to strike a balance between cost-effective deposits and exploring alternative funding sources. While the direct effect of NPF on ROA is unclear, it significantly impacts profitability indirectly through its influence on operational efficiency. Higher NPF levels can lead to increased costs, potentially reducing ROA. Therefore, effective NPF management is crucial for ICBs. The study further emphasizes the importance of managing operational efficiency (BOPO). Lower BOPO, indicating efficient use of operational income, is directly linked to a higher ROA. ICBs should focus on cost-saving measures and optimizing operational processes to improve efficiency and maximize ROA. Overall, the research highlights the critical role of a holistic approach to financial management in ICBs. By effectively managing FDR, NPF, and BOPO, ICBs can achieve a well-balanced funding structure, minimize bad debt risk, and optimize operational efficiency. Keywords: Islamic Banking, Performance, Credit Quality, Operational Efficiency, and Return on Assets.

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  • State University of Semarang
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Rekan penulisOrganisasiArtikel bersama
Heri YantoState University of Semarang1
Amin PujiatiState University of Semarang1
Muh Nizar SohybAfiliasi tidak diketahui1
M. Abzar DuraesaAfiliasi tidak diketahui1
Sari UtamiAfiliasi tidak diketahui1
Suriani NurAfiliasi tidak diketahui1

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Sumber metadata: OAI-PMH (metadata jurnal) https://jurnal.ar-raniry.ac.id/index.php/jihbiz/oai, pertama di-harvest 7 Nov 2026, terakhir terlihat 7 Nov 2026.
Metadata asli (oai_dc) 
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	<dc:title xml:lang="en">Optimizing Performance: A Dynamic Analysis of Credit Quality, Operational Efficiency, and Their Influence on ROA in Indonesian Islamic Banks</dc:title>
	<dc:creator xml:lang="en">Munadiati, Munadiati</dc:creator>
	<dc:creator xml:lang="en">Muhammad, Alfian</dc:creator>
	<dc:creator xml:lang="en">Yahya, M.</dc:creator>
	<dc:creator xml:lang="en">Wulandari, Putri</dc:creator>
	<dc:subject xml:lang="en">Islamic Banking</dc:subject>
	<dc:subject xml:lang="en">Performance</dc:subject>
	<dc:subject xml:lang="en">Credit Quality</dc:subject>
	<dc:subject xml:lang="en">Operational Efficiency</dc:subject>
	<dc:subject xml:lang="en">and Return on Assets</dc:subject>
	<dc:description xml:lang="en">ABSTRACT
This study investigates the influence of key financial management strategies on the Return on Assets (ROA) of Islamic Commercial Banks (ICBs) in Indonesia. The analysis explores the direct and indirect effects of Funding Deposit Ratio (FDR) and Non-Performing Financing (NPF) on ROA, with Operational Costs to Operational Income (BOPO) as a mediating variable. The findings reveal a significant influence of FDR on ICB performance. While a higher FDR leads to lower operational costs, it might also be associated with lower profitability due to deposit interest rates.  ICBs need to strike a balance between cost-effective deposits and exploring alternative funding sources. While the direct effect of NPF on ROA is unclear, it significantly impacts profitability indirectly through its influence on operational efficiency. Higher NPF levels can lead to increased costs, potentially reducing ROA.  Therefore, effective NPF management is crucial for ICBs. The study further emphasizes the importance of managing operational efficiency (BOPO). Lower BOPO, indicating efficient use of operational income, is directly linked to a higher ROA.  ICBs should focus on cost-saving measures and optimizing operational processes to improve efficiency and maximize ROA. Overall, the research highlights the critical role of a holistic approach to financial management in ICBs. By effectively managing FDR, NPF, and BOPO, ICBs can achieve a well-balanced funding structure, minimize bad debt risk, and optimize operational efficiency. 
Keywords: Islamic Banking, Performance, Credit Quality, Operational Efficiency, and Return on Assets.</dc:description>
	<dc:publisher xml:lang="en">Program Studi Perbankan Syariah FEBIII UIN Ar-Raniry</dc:publisher>
	<dc:date>2025-08-19</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://jurnal.ar-raniry.ac.id/index.php/jihbiz/article/view/30212</dc:identifier>
	<dc:identifier>10.22373/cz9qkp11</dc:identifier>
	<dc:source xml:lang="en">Jihbiz: Global Journal of Islamic Banking and Finance; Vol. 7 No. 2 (2025); 273-299</dc:source>
	<dc:source>2684-8554</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://jurnal.ar-raniry.ac.id/index.php/jihbiz/article/view/30212/11927</dc:relation>
	<dc:rights xml:lang="en">Copyright (c) 2025 Munadiati Munadiati, Alfian Alfian, M. Yahya Yahya, Putri Wulandari</dc:rights>
	<dc:rights xml:lang="en">http://creativecommons.org/licenses/by-sa/4.0</dc:rights>
</oai_dc:dc>