Title:
EFFECT OF FINANCIAL PERFORMANCE ON COST EFFICIENCY USING STOCHASTIC FRONTIER APPROACH (SFA) - AT SHARIA COMMERCIAL BANKS IN INDONESIA

Authors:
Masluhah*, Abdul Mongid, Indonesia

Abstract:

Increased efficiency occurs when the output or output level is in production at a lower cost. The Assessment of Islamic Bank's financial performance can be known through financial statements. Also, the Ratio of BOPO and NPL (NPF) is higher. In measuring the efficiency of banks, often using BOPO ratios. Measurement of this research was carried out in two research stages (First Stage and Second Stage). In the size of the Bank into three determining factors that affect the efficiency of banking profit (1) Bank Size Ratio (asset log); (2) CAR Ratio; (3) NPF Ratio; (4) ETA ratio. The purpose of this research is to evaluate the level of cost efficiency by using measurement methods (SFA) at Sharia Commercial Banks in Indonesia; and to test the significance of the effect of Bank Size, Capital, Credit Quality, and Asset Structure simultaneously and partially on the Level of Cost Efficiency in Sharia Commercial Banks in Indonesia. Types of casal research. Sampling techniques carried out are using purposive sampling techniques. The sample population is Sharia Commercial Banks in Indonesia from 2014 to 2018. Data analysis techniques using Multiple Linear Regression Analysis. Based on the analysis results, it can be concluded that the Bank Size, Capital, Credit Quality, and Asset Structure simultaneously have a significant influence on the Level of Cost Efficiency in Sharia Commercial Banks in Indonesia. While The Bank Size Variable partially has a significant favorable influence on the Level of Cost Efficiency in Sharia Commercial Banks in Indonesia. However, capital variables partially do not have a significant favorable influence on the Level of Cost Efficiency in Sharia Commercial Banks in Indonesia; Credit Quality partially has an insignificant negative influence on the Level of Cost Efficiency in Sharia Commercial Banks in Indonesia; asset structure partially has a significant favorable influence on the Level of Cost Efficiency in Sharia Commercial Banks in Indonesia.