Assessing Islamic Banking Equity: A Synthesis of Financial Ratios and Economic Conditions
Article Sidebar
Main Article Content
Abstract
The success of companies in the banking sector is necessary for driving economic growth and state revenues. Their success is usually measured using their share prices which is a good index of their overall value. The objectives of this paper were to analyse the relationship between independent variables and share prices of Islamic Banking companies. The independent variables are the following financial ratios for indicators Return on Assets, Return on Equity, Debt to Equity Ratio, Debt to Asset Ratio, Inflation, interest rates and exchange rates. The study made use of the random effects data model to analyse the various Islamic Banking firms that are listed capital market, using data from 2020 to 2023. The results from the study were that Return on Assets, Return on Equity, Debt to Equity Ratio and Debt to Asset Ratio had a statistically significant impact on the share prices of the Islamic Banking Companies. However, Inflation, Interest, and exchange rates did not have a statistically significant effect on stock prices. The results of this analysis will be useful for stakeholders in the Islamic banking sector as they know the most critical factors in determining the market’s valuation of a companies performance and results to help guide strategies for the future.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Ady, Rony Arpinto. “Analisis Pengaruh Rasio Keuangan Terhadap Harga Saham Pada Perusahaan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Periode 2016-2018.” Media Akuntansi 33, no. 01 (2021): 69–78.
Ahmed, Adel. “Global Financial Crisis: An Islamic Finance Perspective.” International Journal of Islamic and Middle Eastern Finance and Management 3, no. 4 (2010): 306–20. https://doi.org/10.1108/17538391011093252.
Akhatova, Malika, Mohd Pisal Zainal, and Mansor H. Ibrahim. “Banking Models and Monetary Transmission Mechanisms in Malaysia: Are Islamic Banks Different?” Economic Papers 35, no. 2 (2016): 169–83. https://doi.org/10.1111/1759-3441.12131.
Alandejani, Maha. “Does Issuing Islamic Bonds Through Banks Increase Banking Efficiency?” Heliyon 8, no. 8 (2022): 1–9. https://doi.org/10.1016/j.heliyon.2022.e10041.
Alaoui, Abdelkader O. El, Hashim Bin Jusoh, Sheila Ainon Yussof, and Mohamed Hisham Hanifa. “Evaluation of Monetary Policy: Evidence of the Role of Money from Malaysia.” Quarterly Review of Economics and Finance 74 (2019): 119–28. https://doi.org/10.1016/j.qref.2019.04.005.
Aysan, Ahmet F., Mustafa Disli, and Huseyin Ozturk. “Bank Lending Channel in a Dual Banking System: Why Are Islamic Banks so Responsive?” World Economy 41, no. 3 (2018): 674–98. https://doi.org/10.1111/twec.12507.
Bahloul, Slah, Mourad Mroua, and Nader Naifar. “The Impact of Macroeconomic and Conventional Stock Market Variables on Islamic Index Returns under Regime Switching.” Borsa Istanbul Review 17, no. 1 (2017): 62–74. https://doi.org/10.1016/j.bir.2016.09.003.
Bakhouche, Abderazak, Teheni El Ghak, and Mohammad Alshiab. “Does Islamicity Matter for the Stability of Islamic Banks in Dual Banking Systems?” Heliyon 8, no. 4 (2022): 1–14. https://doi.org/10.1016/j.heliyon.2022.e09245.
Camgöz, Mevlüt, and Mehmet Hanefi Topal. “Identifying the Asymmetric Price Dynamics of Islamic Equities: Implications for International Investors.” Research in International Business and Finance 60 (2022): 1–20. https://doi.org/10.1016/j.ribaf.2022.101614.
Caporale, Guglielmo Maria, Abdurrahman Nazif Çatık, Mohamad Husam Helmi, Faek Menla Ali, and Mohammad Tajik. “The Bank Lending Channel in the Malaysian Islamic and Conventional Banking System.” Global Finance Journal 45 (2020): 1–26. https://doi.org/10.1016/j.gfj.2019.100478.
Chen, Tsung-Chun, and Yenchun Jim Wu. “The Influence of R&D Intensity on Financial Performance: The Mediating Role of Human Capital in the Semiconductor Industry in Taiwan.” Sustainability 12, no. 12 (2020): 1–19. https://doi.org/10.3390/su12125128.
Djennas, Mustapha. “Business Cycle Volatility, Growth and Financial Openness: Does Islamic Finance Make Any Difference?” Borsa Istanbul Review 16, no. 3 (2016): 121–45. https://doi.org/10.1016/j.bir.2016.06.003.
Ghouse, Ghulam, Nafees Ejaz, M. Ishaq Bhatti, and Aribah Aslam. “Performance of Islamic vs Conventional Banks in OIC Countries: Resilience and Recovery During Covid-19.” Borsa Istanbul Review 22 (2023): 60–78. https://doi.org/10.1016/j.bir.2022.11.020.
Ginting, M., T. Topowijono, and S. Sulasmiyati. “Pengaruh Tingkat Suku Bunga, Nilai Tukar Dan Inflasi Terhadap Harga Saham (Studi Pada Sub-Sektor Perbankan Di Bursa Efek Indonesia Periode 2011-2015).” Jurnal Administrasi Bisnis S1 Universitas Brawijaya 35, no. 2 (2016): 77–85.
Hasan, Zulfiqar. “Conversion of Conventional Banks into Islamic Banks: The Case of Bangladesh.” International Journal of Ethics in Social Sciences 4, no. 1 (2016): 63–78.
Havidz, Shinta Amalina Hazrati, and Chandra Setiawan. “Bank Efficiency and Non-Performing Financing (NPF) in the Indonesian Islamic Banks.” Asian Journal of Economic Modelling 3, no. 3 (2015): 61–79. https://doi.org/10.18488/journal.8/2015.3.3/8.3.61.79.
Hossain, Akhand Akhtar. “Inflationary Shocks and Real Output Growth in Nine Muslim-Majority Countries: Implications for Islamic Banking and Finance.” Journal of Asian Economics 45 (2016): 56–73. https://doi.org/10.1016/j.asieco.2016.06.004.
Ibrahim, Zaini, Nury Effendi, Budiono, and Budi Kurniawan. “Determinants of Profit and Loss Sharing Financing in Indonesia.” Journal of Islamic Marketing 13, no. 9 (2021): 1918–39.
Kassim, Salina. “Islamic Finance and Economic Growth: The Malaysian Experience.” Global Finance Journal 30 (2016): 66–76. https://doi.org/10.1016/j.gfj.2015.11.007.
Khediri, Karim Ben, Lanouar Charfeddine, and Slah Ben Youssef. “Islamic versus Conventional Banks in the GCC Countries: A Comparative Study Using Classification Techniques.” Research in International Business and Finance 33 (2015): 75–98. https://doi.org/10.1016/j.ribaf.2014.07.002.
Krisnawati, Devi, Ilham Setiawan, and Elsa Ari Setya Anjani. “Analisis Pengaruh Rasio Likuiditas, Solvabilitas Terhadap Harga Saham PT. Indofood CBP Sukses Makmur Tbk.” Jurnal Akuntansi Dan Bisnis 1 (2018): 1–23.
Maghyereh, Aktham, Hussein Abdoh, and Mohammad Al-Shboul. “Oil Structural Shocks, Bank-Level Characteristics, and Systemic Risk: Evidence from Dual Banking Systems.” Economic Systems 46, no. 4 (2022): 1–25. https://doi.org/10.1016/j.ecosys.2022.101038.
Mahdi, Ines Ben Salah, and Mouna Boujelbene Abbes. “Relationship between Capital, Risk and Liquidity : A Comparative Study between Islamic and Conventional Banks in MENA Region.” Research in International Business and Finance 45 (2018): 588–96. https://doi.org/10.1016/j.ribaf.2017.07.113.
Mazouz, Khelifa, Abdulkadir Mohamed, and Brahim Saadouni. “Stock Return Comovement Around the Dow Jones Islamic Market World Index Revisions.” Journal of Economic Behavior and Organization 132 (2016): 50–62. https://doi.org/10.1016/j.jebo.2016.05.011.
Mensi, Walid, Shawkat Hammoudeh, Aviral Kumar Tiwari, and Khamis Hamed Al-Yahyaee. “Impact of Islamic Banking Development and Major Macroeconomic Variables on Economic Growth for Islamic Countries: Evidence from Panel Smooth Transition Models.” Economic Systems 44, no. 1 (2020): 1–14. https://doi.org/10.1016/j.ecosys.2019.100739.
Miah, Mohammad Dulal, and Helal Uddin. “Efficiency and Stability: A Comparative Study between Islamic and Conventional Banks in GCC Countries.” Future Business Journal 3, no. 2 (2017): 172–85. https://doi.org/10.1016/j.fbj.2017.11.001.
Mishkin, Frederic S. The Economics of Money, Banking, and Financial Markets. Policy. Pearson Canada, 2007.
Moi, Elisabeth Mardiana Ito, Ni Luh Putu Sri Purnama, Rai Gina Artaningrum, and Rai Gina Artaningrum. “Influence of Liquidity, Solvency, and Profitability on Share Prices of Banking Listed on the Indonesia Stock Exchange for the 2018-2021 Period.” Jurnal Ekonomika, Bisnis, Dan Humaniora 2, no. 1 (2023): 243–50.
Mubarok, Faizul, and Mohammad Nur Rianto Al Arif. “Pandemic Attack and Islamic Stocks Index: A Cross Country Analysis.” Jurnal Ekonomi Malaysia 55, no. 1 (2021): 27–37. https://doi.org/10.17576/JEM-2021-5501-2.
Mubarok, Faizul, Martino Wibowo, and Sahraman D Hadji Latif. “Safeguarding Stability and Enhancing Profitability: The Case of Islamic Banking in Indonesia.” International Journal of Islamic Economics and Finance (IJIEF) 7, no. 1 (2024): 455–72. https://doi.org/10.18196/ijief.v7i1.20537.
Mukhibad, Hasan, Kiswanto, and Prabowo Yudho Jayanto. “An Analysis on Financial and Social Performance of Islamic Banks in Indonesia.” International Journal of Monetary Economics and Finance 10, no. 3–4 (2017): 295–308. https://doi.org/10.1504/IJMEF.2017.087479.
Nafiah, Rohmatun. “Analisis Pengaruh Rasio Keuangan Dan Variabel Makro Ekonomi Terhadap Harga Saham (Studi Kasus Pada Perusahaan Perbankan Yang Masuk Dalam Indeks LQ45).” Jurnal Masgarif Al-Syariah 4, no. 2 (2019): 125–40.
Nahar, Shamsun, and Niluthpaul Sarker. “Are Macroeconomic Factors Substantially Influential For Islamic Bank Financing? Cross-Country Evidence.” IOSR Journal of Business and Management 18, no. 6 (2016): 2319–7668. https://doi.org/10.9790/487X-1806012027.
Nasuha, Amalia. “Dampak Kebijakan Spin-off Terhadap Kinerja Bank Syariah.” Al-Iqtishad: Journal of Islamic Economics 4, no. 2 (2016): 241–58. https://doi.org/10.15408/aiq.v4i2.2534.
Nasution, Ruri Eka Fauziah, and Habib Ahmed. “Outreach and Profitability Trade-off: Does Synergy between Islamic Banking and Islamic Microfinance Institutions Matter?” Indonesian Capital Market Review 7, no. 2 (2015): 57–73. https://doi.org/10.21002/icmr.v7i2.4853.
Ng, Angeline, and M. Ariff. “Does Credit Rating Revision Affect the Price of a Special Class of Common Stock?” Borsa Istanbul Review 19, no. 2005 (2019): S44–55. https://doi.org/10.1016/j.bir.2019.02.004.
Olson, Dennis, and Taisier Zoubi. “Convergence in Bank Performance for Commercial and Islamic Banks During and After the Global Financial Crisis.” Quarterly Review of Economics and Finance 65 (2017): 71–87. https://doi.org/10.1016/j.qref.2016.06.013.
Prastiyan, and Mochamad Reza Adiyanto. “Pengaruh Rasio Profitabilitas, Leverage, Dan Nilai Pasar Terhadap Harga Saham Bank Syariah Yang Terdaftar Di Bursa Efek Indonesia Periode Juli 2021 - November 2022.” Jurnal Kajian Ilmu Manajemen 3, no. 1 (2023): 103–15.
Rachmawati, Yuni. “Pengaruh Inflasi Dan Suku Bunga Terhadap Harga Saham Pada Perusahaan Perbankan Yang Terdaftar Di LQ45 Bursa Efek Indonesia.” Jurnal Media Akuntansi (Mediasi) 1, no. 1 (2019): 66–79. https://doi.org/10.31851/jmediasi.v1i1.2368.
Rahmani, Nur Ahmadi Bi. “Pengaruh ROA (Return On Asset), ROE (Return On Equity), NPM (Net Profit Margin), GPM (Gross Profit Margin) Dan EPS (Earning Per Share) Terhadap Harga Saham Dan Pertumbuhan Laba Pada Bank Yang Terdaftar Di Bursa Efek Indonesia Tahun 2014 - 2018.” Human Falah: Jurnal Ekonomi Dan Bisnis Islam 7, no. 1 (2020): 104–16.
Saeed, Shifa Mohamed, Islam Abdeljawad, M. Kabir Hassan, and Mamunur Rashid. “Dependency of Islamic Bank Rates on Conventional Rates in a Dual Banking System: A Trade-off between Religious and Economic Fundamentals.” International Review of Economics and Finance 11 (2021): 1–19. https://doi.org/10.1016/j.iref.2021.09.013.
Satria, Chandra, and Yeken Suhiba Putri. “Pengaruh Rasio Keuangan Terhadap Harga Saham Perbankan Syariah Terdaftar Bursa Efek Indonesia.” Islamic Banking : Jurnal Pemikiran Dan Pengembangan Perbankan Syariah 6, no. 2 (2021): 299–320. https://doi.org/10.36908/isbank.v6i2.182.
Setyaningrum, Rani, and Muljono. “Inflasi, Tingkat Suku Bunga Dan Nilai Tukar Terhadap Return Saham.” Jurnal Bisnis & Ekonomi 14, no. 2 (2016): 151–61.
Siddique, Muhammad Abubakar, and Muhammad Zahid Siddique. “Intrinsically Irreconcilable: The Case Against Running Musharakah as Employed by Islamic Banks.” Borsa Istanbul Review 22, no. 5 (2022): 861–72. https://doi.org/10.1016/j.bir.2022.06.003.
Solihin, Solihin, Noer Azam Achsani, and Imam T Saptono. “The Islamic Banking and the Economic Integration in Asean.” Buletin Ekonomi Moneter Dan Perbankan 19, no. 1 (2016): 81–106. https://doi.org/10.21098/bemp.v19i1.601.
Sorwar, Ghulam, Vasileios Pappas, John Pereira, and Mohamed Nurullah. “To Debt or Not to Debt: Are Islamic Banks Less Risky than Conventional Banks?” Journal of Economic Behavior and Organization 132 (2016): 113–26. https://doi.org/10.1016/j.jebo.2016.10.012.
Sudarsono, Heri. “Indikator Makroekonomi Dan Pengaruhnya Terhadap Indeks Saham Syariah Di Indonesia.” Esensi: Jurnal Bisnis Dan Manajemen 8, no. 2 (2018): 115–32. https://doi.org/10.15408/ess.v8i2.7219.
Takarini, Nurjanti, and Octavia Dara Citra Dewi. “Analisis Rasio Keuangan Terhadap Harga Saham Pada Perusahaan Farmasi Yang Terdaftar Di Bursa Efek Indonesia.” Ekonomis: Journal of Economics and Business 7, no. 1 (2023): 234. https://doi.org/10.33087/ekonomis.v7i1.874.
Trad, Naama, Mohamed Ali Trabelsi, and Jean François Goux. “Risk and Profitability of Islamic Banks: A Religious Deception or an Alternative Solution?” European Research on Management and Business Economics 23, no. 1 (2017): 40–45. https://doi.org/10.1016/j.iedeen.2016.09.001.
Tripuspitorini, Fifi Afiyanti. “Analisis Pengaruh Inflasi, Nilai Tukar Rupiah, Dan BI-Rate Terhadap Harga Indeks Saham Syariah Indonesia.” Jurnal Maps (Manajemen Perbankan Syariah) 4, no. 2 (2021): 112–21. https://doi.org/10.32627/maps.v4i2.172.
Wasiaturrahma, Raditya Sukmana, Shochrul Rohmatul Ajija, Sri Cahyaning Umi Salama, and Ahmad Hudaifah. “Financial Performance of Rural Banks in Indonesia: A Two-Stage DEA Approach.” Heliyon 6, no. 7 (2020): 1–9. https://doi.org/10.1016/j.heliyon.2020.e04390.
Yanikkaya, Halit, Nihat Gümüş, and Yaşar Uğur Pabuçcu. “How Profitability Differs Between Conventional and Islamic Banks: A Dynamic Panel Data Approach.” Pacific Basin Finance Journal 48 (2018): 99–111. https://doi.org/10.1016/j.pacfin.2018.01.006.
Zarrouk, Hajer, Khoutem Ben Jedidia, and Mouna Moualhi. “Is Islamic Bank Profitability Driven by Same Forces as Conventional Banks?” International Journal of Islamic and Middle Eastern Finance and Management 9, no. 1 (2016): 46–66. https://doi.org/10.1108/IMEFM-12-2014-0120.