The Impact of Financial Performance on The Market Share of Islamic Commercial Banks in Indonesia

Abstract

Financial performance is a key element in assessing the quality of Islamic banks and is a crucial factor influencing people's decisions to save or use Islamic banking services. This study aims to demonstrate the effect of financial performance on the market share of Islamic Commercial Banks (BUS) in Indonesia registered with the Financial Services Authority (OJK). The financial performance in question is measured using financial ratios, namely the Capital Adequacy Ratio (CAR), Operating Expenses to Operating Income (BOPO), Non-Performing Financing (NPF), Financial to Deposit Ratio (FDR), and Third-Party Funds (DPK). The objects of this study were Islamic Commercial Banks registered with the OJK in 2022-2024. The research sample was selected using a purposive sampling technique. Based on the criteria, the sample used in this study was 13 BUS. Secondary data collected were financial reports from each BUS's website. The data were processed using a multiple regression model statistical test. The results of this study demonstrate that CAR, NPF, and DPK have no effect on BUS market share. Meanwhile, BOPO has a positive effect on BUS market share. Furthermore, FDR negatively impacts the market share of Islamic banks. Simultaneously, CAR, BOPO, NPF, FDR, and DPK influence the market share of Islamic banks.