Factors Influencing Islamic Bank Financing in Indonesia

As intermediary institutions, Islamic banks gather funds from society and then transmit in the form of financing. In practice, the distribution of financing that is the main feature that runs Islamic banks is not as easy in practice as it is in theory since it involves a large number of troubled financing constraints. The reason for this is the lack of procedures to assess banks and supervise customers. This research thus aims to analyze the effect of third-party funds (DPK), Return On Assets (ROA), Non-Performing Financing (NPF) and Financing the Deposit Ratio (FDR) on the total financing provided to society by the Islamic banks in Indonesia. The data used was monthly data issued by Otoritas Jasa Keuangan (OJK) in Sharia Banking Statistics during the period of January 2009-2017. This research uses the Johansen cointegration test to investigate long-term relationships and use the model of error correction (Error Correction Model) to see the short-term relationship. The results show that third-party funds and ROA influence financing in the short term and long term. Other variable is the FDR, which had the influence of short-term financing. Non Performing Financing does not affect the financing either in a short-term or long-term period.