Comparative Analysis of Bank Health Levels towards the Profitability of Sharia Banks in Indonesia and Malaysia

Aims: To analyze and compare the effect of bank health on profitability in Islamic banks in Indonesia and Malaysia.

Study design: The research method used is quantitative descriptive research.

Place and Duration of Study: The sampling technique used was purposive sampling. The study was conducted on Sharia Banks registered with the Indonesian Financial Services Authority and Sharia Banks listed on the Malaysia Stock Exchange with a research period of four years, from 2016-2019.

Methodology: The type of data obtained in this study is documentary data. The source of data used in this study is secondary data, namely data on audited financial statements of Islamic banks in Indonesia and Malaysia which were taken through the websites www.idx.co.id and www.bursamalaysia.com in 2016-2019. Data analysis was performed using multiple regression analysis using IBM SPSS to see the effect of the independent variables on the dependent variable, including the Descriptive Statistics Test and Multiple Regression Test.

Results: The results of this study indicate that in Islamic banks in Indonesia and Islamic banks in Malaysia there is no difference in the results of testing the effect of NPF on ROA, namely NPF is not significant in affecting profitability as proxied by ROA. However, the results of testing the effect of OER on ROA are different in the two samples. In the sample of Islamic banks in Indonesia, OER has a significant effect on ROA. While OER is not significant in influencing ROA in the sample of Islamic banks in Malaysia. Testing the effect of CAR on ROA also shows results that are not different between the samples of Islamic banks in Indonesia and Islamic banks in Malaysia, namely CAR has a significant effect on ROA. In terms of soundness level analysis, Islamic banks in Malaysia tend to be superior in the perspective of Risk Profile (NPF) and Earnings (OER), where most Islamic banks in Malaysia get the title of Very Healthy compared to Islamic banks in Indonesia. While in the perspective of Capital (CAR), both samples get the same predicate, namely Very Healthy.

Conclusion: The health level of Islamic banks in Malaysia is superior compared to the health level of Islamic bank in Indonesia.