Efficiency, Risk and Profitability of Islamic Banks: Under Pressure in the Competition of the Banking Industry in Indonesia

This study analyses the factors that affect the profitability of Islamic banks in Indonesia. The independent variables consists of efficiency,risk, liquidity,CAR,and macroeconomic conditions:GDP andinflation.Thedependentvariableisprofitability.This research was conducted in the Islamic banking industry in Indonesia. The research uses quarterly data from 2006-2019. The purpose of this study is to analyse the effect of efficiency, risk, liquidity, capital, and macroeconomic conditions on the profitability of Islamic banks in Indonesia. Data analysis techniques used multiple regression. The results showed that the efficiency and risk had a positive effect on profitability. Inflation has a negative effect on profitability. While liquidity, CAR, and GDP do not affect the profitability of Islamic banks. Keywords: Islamic bank; Financing; Net Operating Margin; Profitability