Risk of Debt-Based Financing in Indonesian Islamic Banking

Abstract

Risk of Debt-Based Financing on Indonesian Islamic Banking. The purpose of this study is to know the risk of debt-based financing in Islamic banking in Indonesia by using an accounting based calculation, those are NPF analysis, Credit risk Z-score and Altman Z-score. This study is telling about the risk of debt-based finacing on Indonesian Islamic banking using an accounting based measurement, those are NPF analysis, Credit Risk Z-score analysis and Altman Z-score analysis. The data was obtained from 2011 to 2015 from the website of each bank. The result is a risk on debt-based financing on Indonesian Islamic is low. The measurement using 3 accounting based measurement tool gives a consistent result, that is Indonesian Islamic banking use a debt-based financing have a high financial stability and a low risk.

Profit-Loss Sharing Financing and Stability of Indonesian Islamic Banking

“…This study measures the stability of Islamic banks using the Z-score. Several previous studies employ the Z-Altman score to analyze the stability of Indonesian Islamic banks such as Effendi (2017) and Bawono and Setyaningrum, 2018). The application of Z-score in many studies could predict the failure of Islamic banks well (Čihák & Hesse, 2010;Beck, Demirgüç-Kunt, & Merrouche, 2013).…”

The Comparison of Soundness Level of Islamic Banks in Indonesia and Malaysia

“…It is proved when Islamic banks in Malaysia keep their performance because of sufficient liquidity instruments and low cost of funding. Effendi (2017) found that the risk on debt-based financing in Indonesian Islamic banks is low.…”