The Influence of Profit Sharing Rate, Asset Quality and Liquidity on Mudharabah Financing

Abstract

The purpose of this research is to determine the effect of the level of profit sharing, asset quality, and liquidity on mudharabah financing in Islamic Commercial Banks. The profit sharing rate is the proportion of profits obtained from mudharabah financing activities. Asset quality is measured through Non Performing Finance (NPF) and Islamic bank liquidity is used by the Financing to Deposit Ratio (FDR).The sample used in this study is profit sharing data, Non Performing Financing, Financing to Deposit Ratio (FDR), and Amount of Mudharabah Financing in Islamic Commercial Banks in Indonesia which are recorded in the 2015-2019 Financial Services Authority. Of the 14 banks, there are 9 Islamic Commercial Banks that meet the completeness of the data to be included in this study. The data analysis technique uses a panel data approach, which uses panel data regression procedures from the Eviews Ver 10.0 program.From the results of the Chow test and the Lagrange Multiplier test, the best Common Effect Model was selected according to the research data. Furthermore, the research states that partially (t test) that the Profit Sharing Rate variable has a significant effect on Mudharabah Financing, while the NPF variable and the FDR variable do not have a significant effect on Mudharabah Financing. The value of Adjusted R2 shows that the Profit Sharing Rate, Non Performing Financing, and Financing to Deposit Ratio affect Mudharabah Financing by 86.5%.