The Impact of Mudharabah and Musharakah based Financing to Credit Risk

Fauziyah Adzimatinur, Vigory Gloriman Manalu

Abstract


Indonesian Islamic banking possesses riskier credit risk than conventional banking system. The Islamic financing system in Indonesia is done through mudharabah and musharakah scheme with the profit and loss sharing system. This research aims to analyze the impact of mudharabah and musharakah to the credit risk of Islamic bank in Indonesia. Variables used in this research are financing data with mudharabah and musharakah contract, credit risk shown by Non-Performing Financing (NPF). The reaserch estimated time series data from January 2016 to June 2019 with Ordinary Least Square (OLS). The results show that Mudharabah possesses higher risk than musharakah and both contract affect the non-performing financing significantly. Profit and loss sharing presentation has negative sign to the NPF, this means that the greater return that the consumer receive will make them feel more secure and thus reduce the non-performing financing. Inflation does not affect NPF significantly.


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References


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