Analyzing The Performance of Indonesian Islamic Rural Banks: Does Bank Size Matter?
DOI:
https://doi.org/10.53840/ijiefer32Keywords:
Islamic rural bank, bank performance, bank size, panel dataAbstract
This paper aims to analyze the effect of bank size on performance of Indonesian Islamic rural banks. To achieve this objective, this study analyzes quarterly panel data of financial report from Indonesian Islamic rural banks from Q12011 to Q42016 with total 3,222 observations. Performance, as the dependent variable in this study, is measured by return on assets. Bank size, as the independent variable in this study, is measured by natural logarithm of total assets. In addition, this study also uses financing ratio, capital ratio, nonperforming financing, GDP growth rate and inflation rate as control variables. The result shows that the size has a positive and significant effect on performance in small banks. By examining the effect of bank size on performance of Indonesian Islamic rural banks, this study is expected to fill the gap in literature of Islamic financial institutions in Indonesia, especially the Islamic rural banks.
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