Comparative Analysis of The Effect of Loan/Financing to Deposit Ratio, Labor Costs Growth and Promotion Costs Growth to Returns on Assets in Islamic Banks and Conventional Banks in Indonesia

Abstract

The banking industry is the locomotive of economic growth in a country. Therefore, the performance of the banking industry must be the focus of all stakeholders. This study compares the factors that influence the performance represented by the Return on Asset (ROA) ratio in both the Islamic banking industry and the conventional banking industry. The factors that affect the ROA used in this study are the distribution of financing (FDR/LDR), growth in labor costs, and growth in promotion costs. The method used in this research is quantitative by using

a panel data regression test. The data used are primary data from Islamic banks and conventional banks for four years, namely in the 2014-2018 period. Moreover, the research questions are: (i) Are there differences in FDR's effect on ROA between Islamic banks and conventional banks?; (ii) Are there differences in the effect of growth in labor costs on ROA between Islamic and conventional banks?; (iii) Are there differences in the influence of the growth in promotion costs on ROA promotion between Islamic banks and conventional banks? The results of the study show that the distribution of financing (FDR) to Islamic banks and conventional banks positively and significantly affects ROA. The growth of labor costs in Islamic banks and conventional banks has a negative and significant effect on ROA. At the same time, the growth in promotion costs between Islamic banks and conventional banks is different. Promotion cost growth in Islamic banks has a negative and significant effect on ROA growth. However, in conventional banks, the growth in promotion costs has a positive and significant effect on ROA.