THE INFLUENCE OF NON-PERFORMING FINANCING (NPF), CAPITAL ADEQUACY RATIO (CAR) AND FINANCING DEBT RATIO (FDR) ON RETURN ON EQUITY (ROE) AND ITS IMPLICATION ON MICRO SYARIA FINANCIAL INSTITUTION POLICY IN INDONESIA

Management, Finance

The aim of this research is to determine and analyze the influence of Non Performing Finance (NPF), Capital Adequacy Ratio (CAR) and Financing Debt Ratio (FDR) on Return On Equity (ROE) of Sharia Microfinance Institutions in Indonesia partially or simultaneously and their Implications for Policy LKMS in Indonesia. This type of research is verification. This research method is a quantitative research approach, statistical data analysis, with the aim of testing hypotheses. In accordance with the hypothesis formulated, the analysis used in this research is multiple linear regression analysis with least squares equations or OLS (Ordinary Least Square). In this research, the population is Sharia Microfinance Institutions which are proxied by Sharia People's Credit Banks totaling one hundred and sixty five throughout Indonesia which are registered with the Financial Services Authority (OJK). This research took NPF, CAR, FDR and ROE data in the form of monthly data from January 2010 to June 2017. The results showed that NPF, CAR and FDR were identified as partially significant in influencing LKMS performance. The variation in NPF, CAR and FDR on LKMS financial performance was 54.09% and the remainder was due to variations in other variables which were not addressed in the research. This means that the financial performance of LKMS is influenced by the high and low NPF, CAR and FDR ratios. Policy Implications for Sharia Microfinance Institutions in Indonesia requires an important role from the Government, in this case the authority is the OJK to prepare derivative regulations regarding actions taken by LKMS experiencing financial difficulties in order to improve their performance.

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