This study aims to analyze, prove and find; (a) the effect of the profit sharing system on the risk of islamic rural banks; (b) the effect of the profit sharing system on efficiency of the islamic rural banks; (c) the effect of efficiency on risk of the islamic rural bank; (d) the effect of the profit sharing system on the profitability of the islamic rural banks; (e) the effect of risk on the profitability of islamic rural bank and (f) the effect of efficiency on the profitability of an islamic rural bank. This research is included in the type of explanatory research . This study uses path analysis with the SPSS program to test, analyze and prove the relationship of the influence of independent variables that affect the profitability of the islamic rural banks. This study found that (a) profit sharing system has no significant effect on the risk of the islamic rural banks; (b) the profit sharing system has a significant effect on the efficiency of the islamic rural banks; (c) efficiency has a significant effect on the risk of islamic rural banks; (d) the profit sharing system has no significant effect on profitability of the islamic rural banks; (e) the risk has a significant effect on the profitability of the islamic rural banks and (f) efficiency has a significant effect on the profitability of an islamic rural bank (IRB);.
Hassoune (
According to Hassoune (
only cause a decrease in the value of the storage assets but also reduce the bank's profits.
Theoretically Islamic banks face two risks, namely moral risk because of the low honesty and integrity of some borrowers in delivering losses, and business risks that come from unexpected market behavior (
Yulinartati, Roziq and Norita (
Literature Review
Sharia Enterprise Theory
Sharia enterprise theory is an enterprise theory that has been internalized with islamic values in order to produce a transcendental and more humanistic theory. According to Triyuwono (2007: 4), enterprise theory is a theory that recognizes accountability not only to the owner of the company but to a wider group of stakeholders. Enterprise theory was later developed so that the theory is closer to the concept of sharia so that a theory is formed which is known as the sharia enterprise theory. According to Triyuwono (2007: 4), sharia enterprise theory explains that stakeholders consist of God, nature and humans and the highest stakeholder is God as the center.
Islamic Rural Bank
Islamic rural bank use sharia principles in conducting business, it is further regulated according to the Decree of the Director of Bank Indonesia No. 32/36 / KEP / DIR / 1999 dated May 12, 1999 concerning Sharia Rural Banks. In this case, Islamic rural bank can technically be interpreted as financial institutions same with conventional rural bank, whose operations use islamic principles. The desired objectives with the establishment of islamic rural banks are:
a. improving the economic welfare of muslims, especially the poor who are generally in rural areas;
b. increase employment, especially at the sub-district level, so as to reduce the flow of urbanization;
c. fostering the spirit of Islamic brotherhood through economic activities in order to increase per capita income towards an adequate quality of life.
This research is included in the type of explanatory research because it explains causal relationships between variables through testing hypotheses. The type of data used in this study is secondary data. Secondary data is the financial statements of the sharia rural banks period of year of 2014-2017 obtained from the Directory of the Indonesian Financial Services Authority. The population number of this study were 29 sharia rural banks (Statistics of the Indonesian Financial Services Authority, 2018). While the sample in this study is the sharia rural bank which has published and announced the financial statements from 2014 to 2017. The sample size according to Hair et al (
Path analysis is the relationship between independent variables, intermediate variables, and dependent variables which are usually presented in the form of diagrams. Path analysis is used to analyze the pattern of relationships between variables in order to determine the direct or indirect effects of a set of independent (exogenous) variables on the dependent variable (endogenous). The following is a research conceptual framework that summarizes the relationship of independent variables, intermediate variables, and dependent variables which are usually presented in the form of path diagram (as mentioned in figure 1) that will be analyzed by path analysis.
Data normality test aims to determine whether the residual variable has a normal distribution. Based on the results of normality testing, it can be seen that the probability or significance value is the profit sharing system variable of 0.657, the risk variable is 0.091, the efficiency variable is 0.994 and the profitability variable is 0.731. This value is greater than 0.05. so, it can be stated that the data in this study are normally distributed. Multicollinearity test aims to determine whether the regression model found a correlation between independent variables (Ghozali, 2011: 105). Based on the results of the collinearity statistics analysis, it is known that the model does not occur multicollinearity. This is indicated by the VIF value of each variable less than 10 and the tolerance value of more than 0.10.
Heteroscedasticity test aims to test whether in the regression model there is a variance inequality from residuals one observation to another observation Heteroscedasticity test results show that the significance value of the 0.510 glacier test exceeds 0.05. So it can be stated that there is no heteroscedasticity. The autocorrelation test aims to test whether in the linear regression model there is a correlation between the interfering error in period t with the confounding error in the period t-1 (before). The result of autocorrelation test using run-Test shows that the significance value of the run test is 0.106 exceeding 0.05. So that it can be stated that the data in this study there is no autocorrelation.
Path analysis is an extension of multiple linear regression analysis, or path analysis is the expansion of regression analysis to estimate the relationship between variables that have been predetermined based on theory (
Path Analysis Test Results
Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
B | Std. Error | Beta | ||||
1 | ( |
1.522 | .367 | 4.145 | .000 | |
LNSBH | -.019 | .016 | -.118 | -1.219 | .226 |
Source: SPSS Output
Based on the results of path analysis test shown in table 1, it is known that the significance value is 0.226 (not significant). This shows that the profit and loss sharing system measured by profit and loss sharing financing has no significant effect on financing risk. Based on the results of the path analysis test, it is known that the research equation in the form of regression models is as follows.
Y = 1,522 – 0,019 X1
Y = risk
X1 = profit and loss sharing system
Path Analysis Test Results
Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
B | Std. Error | Beta | ||||
1 | ( |
-2.763 | 1.148 | -2.405 | .018 | |
LNSBH | .184 | .049 | .342 | 3.725 | .000 |
Source: SPSS Output
Based on the results of the path analysis test shown in table 2, it is known that the significance value is 0,000. This shows that the profit and loss sharing system as measured by profit and loss sharing financing has a significant effect on efficiency as measured by total mudharabah and musyarakah financing divided by total mudharabah fund pooling. Based on the results of the path analysis test it is known that the research conditions in the form of regression models are as follows.
Y = -2,763 + 0,184 X1
Y = efficiency
X1 = profit and loss sharing system
Path Analysis Test Results
Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
B | Std. Error | Beta | ||||
1 | ( |
.941 | .046 | 20.372 | .000 | |
INVEFI | .089 | .028 | .293 | 3.142 | .002 |
Source: SPSS Output
Based on the results of the path analysis test shown in table 3, it is known that the significance value is 0.002 (significant). This shows that the efficiency measured by total mudharabah and musyarakah finanacing divided by total mudharabah fund pooling has a significant effect on financing risk. Based on the results of the path analysis test, it is known that the research model in the form of a regression model is as follows.
Y = 0,941 + 0,089 X1
Y = risk
X1 = efficiency
Path Analysis Test Results
Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
B | Std. Error | Beta | ||||
1 | ( |
-.001 | .139 | -.006 | .996 | |
LNSBH | -.001 | .006 | -.022 | -.202 | .840 | |
RISK | .090 | .034 | .285 | 2.666 | .009 | |
INVEFI | .035 | .011 | .364 | 3.348 | .001 |
Source: SPSS Output
Based on the results of the path analysis test shown in table 4, it is known that the efficiency measured by total mudharabah and musyarakah finanacing divided by total mudharabah fund pooling has a significant effect on profitability as measured by ROE with a significance level 0.001. Financing risk has a significant effect on profitability as measured by ROE with a significance level 0.009. While the profit and loss sharing system measured by profit sharing financing has no significant effect on profitability as measured by ROE with a significance level 0.840.
Based on the results of the path analysis test, it is known that the research model in the form of a regression model is as follows.
Y = -0,001 - 0,001 X1 + 0,090 X2 + 0,035 X3
Y = profitability
X1 = profit and loss sharing system
X2 = risk
X3 = efficiency
Profit and Loss Sharing System and Risk
Based on the results of the path coefficient test, it is found that the profit and loss sharing system variable has no significant negative effect on risk with a p-value 0.226 greater than 0.05 and the coefficient value -0.019. The results of this study cannot prove that the higher the profit and sharing system will affect the risk of financing lower or higher. The findings of this study do not support Muhammad's explanation (
Profit and Loss Sharing and Efficiency
Based on the results of the path coefficient test, it is found that the profit and loss sharing system variable has a significant positive effect on efficiency with a p-value 0,000 smaller than 0.05 and a coefficient 0.184. The results of this study can prove that the higher the profit and loss sharing system will affect the higher efficiency. The findings of this study support the theory described by Hassoune (
Efficiency and Risk
Based on the results of the research path coefficient test, it is found that the efficiency variable has a significant positive effect on risk with a p-value 0.002 smaller than 0.05 and a coefficient 0.089. The results of the study can prove that the higher the efficiency will affect the higher the risk. The findings of this study support the theory described by Arjadiwinto and Riyanti (
Profit and Loss Sharing System and Profitability
Based on the results of the path coefficient test, the study resulted in the finding that the profit and loss sharing system variable has no significant negative effect on profitability with a p-value 0.840 greater than 0.05 and the coefficient value -0.001. The results of this study cannot prove that the higher the profit and loss sharing system will affect the higher profitability. The findings of this study do not support the theory described by Yazhini (
Risk and Profitability
Based on the results of the path coefficient test, the study resulted in the finding that the risk variable had a significant positive effect on profitability with a p-value 0.009 less than 0.05 and a coefficient 0.090. The results of the study can prove that higher risk will affect the higher profitability. Research findings support the theory described by Bashir (
Efficiency and Profitability
Based on the research path coefficient test results, the study resulted in the finding that the efficiency variable positive significant effect on profitability with p-value 0.001 less than 0.05 and a coefficient 0.035. The results of the study can prove that the more efficiency will affect the higher profitability. The study's findings support the theory described by Brozen, Smirlock, Evanoff and Fortier (
Based on the results of the research and discussion, this study concludes that the profit and loss sharing system has no significant effect on risk. This shows that the first hypothesis which states that the profit and loss sharing system has a significant effect on risk is rejected. Theoretically, this finding implies that the profit and loss sharing system is not a fundamental antecedent/predictor that plays an important role in decreasing and increasing financing risk. The profit and loss sharing system has a significant effect on efficiency. This shows that the second hypothesis which states that the profit and loss sharing system has a significant effect on efficiency is accepted. Theoretically, the findings of this study mean that profit and loss sharing financing is a fundamental antecedent/predictor that plays an important role for decreasing and increasing efficiency. Efficiency has a significant effect on risk. This shows that the third hypothesis which states that efficiency has a significant effect on risk is accepted. The results of this study can prove that the higher the efficiency of financing will affect the higher risk of financing. Theoretically, the findings of this study contain the meaning that the efficiency of financing has a significant effect on financing risk.
The profit and loss sharing system has no significant effect on profitability. This shows that the fourth hypothesis which states that the profit and sharing system has a significant