Islamic Financial Bank Performance in Indonesia and Malaysia

ARTICLE INFO ABSTRACT Article history: Received January 28, 2022 Revised November 18, 2021 Accepted 24 March, 2022 Available online on April 1, 2022 The increasing popularity of Islamic banks with the opening of various Islamic banks, both independent and as one of the long-established subsidiaries of conventional banks, seems to show that the banking industry, which applies Sharia principles in every business step, promises profitable business expansion opportunities. The purpose of this study is to compare the financial performance of Islamic commercial banks that were established in Indonesia and Malaysia in the 2016 – 2018 period using general financial ratios, namely the ratio of CAR, ROA, FDR and Total Asset Turnover. The research sample was taken by purposive sampling. The data obtained were analyzed by descriptive statistical methods to see the overall performance of banks both within and between countries, then the independent sample t test was used to see the significance of the differences in the performance of each type of banking industry in each country, both in Indonesia and Malaysia. This study shows that the financial performance of Islamic commercial banks in Indonesia and Malaysia has significant differences.

The increasing popularity of Islamic banks with the opening of various Islamic banks, both independent and as one of the long-established subsidiaries of conventional banks, seems to show that the banking industry, which applies Sharia principles in every business step, promises profitable business expansion opportunities. The purpose of this study is to compare the financial performance of Islamic commercial banks that were established in Indonesia and Malaysia in the 2016 -2018 period using general financial ratios, namely the ratio of CAR, ROA, FDR and Total Asset Turnover. The research sample was taken by purposive sampling. The data obtained were analyzed by descriptive statistical methods to see the overall performance of banks both within and between countries, then the independent sample t test was used to see the significance of the differences in the performance of each type of banking industry in each country, both in Indonesia and Malaysia. This study shows that the financial performance of Islamic commercial banks in Indonesia and Malaysia has significant differences.

INTRODUCTION
Bank is an institution that is believed to have a very important role in efforts to harmonize, harmonize, and balance various elements of development. The role with this strategic value is due to the main characteristics of the banking business which carries out activities of collecting and distributing funds to the public. Based on the principle of economic democracy, banks are development support institutions in the context of increasing growth, stability, and equity that support the implementation of national development to improve people's living standards 1 .
The existence of the banking sector as a supporter of the country's economy has a very important role. This is evidenced by the increasing number of modern societies that involve or use banking services in carrying out economic processes. Bank is an institution where the institution is engaged in the financial sector which has an important role in the running of economic activities in a country. Article 1 paragraph (2) of Law no. 10 of 1998 which amended Law no. 07 of 1992 explains that banking is a business entity that collects public funds in the form of savings or other deposits and distributes the collected funds. 1 Fitri, Laila. "Pengaruh Ukuran Perusahaan, Kesempatan Bertumbuh Dan Profitabilitas Terhadap Earnings Response Coefficient." Universitas Negeri Padang, no. September, 2013, pp. 1-16. To the public in the form of loans that aim to improve the feasibility of living in a country. Based on price determinants, the banking industry has two types of banks, namely banks with conventional business operations and banks that carry out their business by adhering to Sharia law 2 . Conventional banks conduct their business in a conventional way, are banks which in their operational activities provide services in payment traffic based on established general procedures and provisions. Meanwhile, a bank that carries out its activities according to sharia is a bank which in its operational activities both in raising funds or raising funds is based on general procedures and provisions based on Islamic principles in it. Southeast Asia is a region that is at the center of the development of the banking and finance industry, including the Islamic banking industry. Malaysia and Indonesia are two countries within the ASEAN region that are pioneers in the development of the Islamic banking industry. Historically, Malaysia has developed the concept of Islamic finance since 1963 through the establishment of Tabungan Haji Malaysia.
Indonesia is also a country in ASEAN that has participated in developing a sharia-based banking and financial system. The Indonesian state uses a different approach from Malaysia which uses an approach with the main driver being the state, while the Islamic banking industry in Indonesia tends to be market driven. So that Indonesia has only experienced acceleration momentum regarding Islamic banking since the enactment of Law No. 21 of 2008 concerning Islamic banking 3 . Seeing that both countries pay attention to their Islamic banking, it really attracts the attention of researchers to participate in knowing whether there is something different offered by Islamic banks in the economic development of the two countries, so that the comparison of financial performance between conventional commercial banks and commercial banks Sharia law in the two countries will also be a concern in this study. In carrying out the comparison of financial performance, researchers will use ratio comparisons. The first ratio to be used is the liquidity ratio. This liquidity ratio approach is used to determine the entity's ability to pay in paying off short-term obligations when billed. The liquidity ratio approach can be done by calculating the LDR (Loan to Deposit Ratio) so that it can be seen the comparison between the total number of credits that have been disbursed by the bank and the funds that have been 3 Hendayana, Y. "Rasio Profitabilitas, Rasio Leverage, Serta Risiko Sistematis Terhadap Return Saham Pada Sektor Pertambangan." Jurnal Riset Akuntansi Serta Keuangan, vol. 4, no. 3, 2016Keuangan, vol. 4, no. 3, , pp. 1177Keuangan, vol. 4, no. 3, -1188 obtained 4 . The second ratio approach is to calculate the solvency ratio. Solvency ratio is a way to measure the ability of a bank to find sources of funds in order to finance its operational activities. One of the solvency ratios that can be used in calculating the fundraising ability of a bank is the Capital Adequacy Ratio, where this ratio is used to measure the level of capital adequacy controlled by the bank in order to mitigate assets that generate risk 5 . The next ratio approach that can be used is the profitability ratio, where this ratio can be interpreted as an indicator to determine the bank's ability to generate profits. The profitability of a bank can be determined by calculating ROA (Return On Assets) where by calculating ROA it can be seen the comparison between nett earnings before tax and the total assets controlled by the bank per year 6 . The next ratio approach is to calculate the activity ratio. The activity ratio itself is used to determine the level of bank activity as indicated by the effective use of 4

A. Research Approach
In carrying out data analysis, the researcher uses a quantitative method approach, according to Quantitative Research is a research method that has a positivist philosophical foundation and its use tends to examine a population or certain samples.

B. Operational
Definitions and Variable Indicators There are four variables used in this study, including: a) Liquidity Ratio The liquidity ratio talks about the company's financial ability to meet its short-term obligations. This ratio provides information on the comparison between the company's current assets and its short-term liabilities so that it can be seen the ability of each rupiah of assets to cover or pay off each rupiah of its short-term liabilities (Fauzia and Riyadi). In this study, the liquidity ratio used is nonperforming finance and credit risk. Solvency comes from the word solvable which means that an entity has sufficient assets or assets to cover all of its long-term debt. So the solvency ratio gives good signals to management or to investors that long-term debt is too large or management can add long-term debt because the company is still able to add more debt 8 . c) Profitability Ratio The profitability ratio is used to measure how much the entity's ability to seek profit is. This ratio provides information about how efficient a management is in running the entity's operations 9 .
In this study, the profitability ratio used is ROA (Return on Assets). d) Activity Ratio The activity ratio is used by entities or investors to find out how much an entity uses its available resources in order to earn income through sales operational activities, but financial ratios do not describe the financial condition of an entity, but the activity ratio describes the intensity of the company's operations during a certain 8  From the results of the research conducted, it can be seen that the average value of the mean is greater than the value of the Standard Deviation, therefore it can be said that the data is normally distributed.

Data Quality Test
Testing the quality of the data (test for normality and homogeneity) uses SPSS software version 23.0 for windows. The results of SPSS calculations for the normality test and homogeneity test are presented below: a. Normality test      (2020) From the test results above, it can be seen that the sig value of 0.703 > 0.05 means that there is no difference in financial performance with the total asset turnover indicator in Islamic banking companies in Indonesia and Malaysia.

Differences in the Financial Performance of Islamic Banking in Indonesia and Malaysia based on the CAR Ratio
Based on the results of the independent sample t-test calculation, it can be seen from the CAR ratio perspective, the performance of Islamic commercial banks in Indonesia does not have a significant difference from that in Malaysia. The results above are not in accordance with the results of research conducted by 16 , 17 , 18 which states that there are significant differences in the CAR performance of Islamic banks and Indonesian conventional banks. This needs to be studied more deeply, considering that research that does not support the results of this study uses data from 2010 to 2014, so that differences in research results may occur due to the time difference. 16 , vol. 4, no. 1, 2021, pp. 298-309, doi:10.33258/birci.v4i1.1594. 18 Restiyana. Analisis Pengaruh CAR, NPL, BOPO Dan LDR Terhadap Profitabiltas. 2011.

Differences in the Financial Performance of Islamic Banking in Indonesia and Malaysia based on ROA Ratio
Based on the results of the independent sample t-test, it can be seen in terms of the ROA ratio, the performance of Islamic banks in Indonesia and Malaysia does not have a significant difference, although the table shows that the ROA ratio of Islamic banks in Indonesia is higher than Malaysia, although the difference is not significant. This study does not give the same results as previous research conducted by 19 which states that there is a significant difference between the performance of conventional commercial banks and Islamic commercial banks in terms of solvency. and their results state that conventional banks have superior solvency when compared to Islamic banks. Research conducted by is supported by research conducted by 20 .

Differences in the Financial Performance of Islamic Banking in Indonesia and Malaysia based on the FDR Ratio
Based on the results of the independent sample t-test, which is 19 Ehiedu, Victor Chukwunweike, and Gladys Toria. "Audit Indicators and Financial Performance of Manufacturing Firms in Nigeria." Linguistics and Culture Review, vol. 6, no. July 2021, pp. 14-41, doi:10.21744/lingcure.v6ns1.188 20 Tarigan, and Prawihatmi. "Peran Mekanisme Good Corporate Governance Terhadap Kinerja Keuangan Perbankan Yang Terdaftar Di Bursa Efek Indonesia." Jurnal Riset Ekonomi Dan Bisnis, vol. 10, no. 2, 2018 seen in terms of the FDR ratio, the performance of Islamic commercial banks in Indonesia and Malaysia does not have a significant difference, based on descriptive statistical analysis, the performance of the FDR ratio of Indonesian Islamic banks is above Malaysian Islamic banks.
Where the performance of the highest Sharia bank FDR ratio is owned by Panin bank. The results of the tests carried out in this study weaken the results of previous research conducted by 21 , where the research states that the FDR ratio of conventional banks is better and there is a significant difference between the performance of conventional banks and Islamic banks (Hendayana).

Differences in the Financial Performance of Islamic Banking in Indonesia and Malaysia based on Total Asset Turnover Ratio
Based on the results of the independent sample t-test, it can be seen in terms of activity, the performance of Islamic commercial banks in Indonesia and Malaysia does not have a significant difference. The high level of activity in Indonesian Islamic banks explains why the profitability ratios of conventional banks show higher returns than the profitability of Islamic banks in Malaysia. In principle, if the assets in the bank immediately turn into cash, and immediately turn them back into credit, then logically, profits will be obtained faster. 21 Suyono. Analisis Regresi Untuk Penelitian. 1st ed., Deepublish, 2018.

CONCLUSION
The results of the independent sample t-test can be seen that the financial performance of Islamic banks both in Indonesia and Malaysia, seen from the CAR ratio, does not have a significant difference. The results of the independent sample t-test can be seen that the financial performance between Islamic banks both in Indonesia and in Malaysia, seen from the ROA ratio, does not have a significant difference. The results of the independent sample t-test can be seen that the financial performance between Islamic banks in Indonesia and Malaysia seen from the FDR ratio there is no significant difference. The results of the independent sample t-test can be seen that the financial performance of Islamic banks both in Indonesia and in Malaysia seen from the activity ratio, there is no significant difference.

Suggestion
In order to increase the efficiency and effectiveness of a company, management is expected to hold regular training so that employees are able to understand in depth the systems that exist within the company. This increase in knowledge will certainly improve employee performance in the implementation of job descriptions related to the position of each employee. It is hoped that the company's management will set more specific goals so that they are right on target. Specific goals can provide an overview and benchmarks in determining the success of a system, with an explanation of the objectives, each member of the organization can certainly understand and be able to carry out the achievement of targets by utilizing the skills and competencies they already have. In order for a company to carry out improving the effectiveness of its information system, top management is required to provide support and participate in the involvement of the progress and development of a job or project as well as to provide assurance of the availability of the necessary resources. Top management support in an organization is crucial because with their support, all members of the organization have easy access to resources.
For academics, it is better to be able to carry out research by carrying out the expansion of variable observations and it is hoped that they do not use the conclusions given in this study as an absolute final decision, so that the next academic is expected to be able to follow the development and progress of the performance of Islamic commercial banks including conventional commercial banks. if the circumstances allow, academics can add or use other research methods in the context of measuring the financial performance of conventional and sharia commercial banks. For companies, Islamic commercial banks, including conventional commercial banks, should see and improve the quality of their financial ratios. For investors, they should also pay attention to banks that experience an increase in a positive direction from year to year.For further researchers with the same topic, they should add other variables that are still closely related to other financial performance so that the results obtained are more significant to compare the performance of these banks.For further researchers to be able to compare the financial performance between the State of Indonesia and the State of Malaysia both in terms of conventional banking and Islamic banking so that it can be known which one is better between the two countries.