The Role of the Rate of Profit Concept in Creating Islamic Financial Market Stability

DOI

10.2991/gcbme-16.2016.22How to use a DOI?

Keywords

rate of profit, economic stability, equitable distribution of income, equitable distribution of wealth

Abstract

This study aims to establish a concept of rate of profit on Islamic banking that can create economic justice and stability in the Islamic Financial Market. To determine the role of the rate of profit as the basis of the profit sharing system implemented in the Islamic financial system, we can see the connection of rate of profit in creating financial stability, especially in the asset-liability management of financial institutions that generate a stable net margin or the rate of profit that is not affected by the ups and downs of the market risk factors, including indirect effect on interest rates. Based on the data collected approach, this kind of research is qualitative and quantitative research. In this research, a study-case research is held to see the effects of the use of indirect form of interest rate to the rate of profit of Islamic Bank in the period of rising interest-rate from the period of 2004-2009 in Bank Syariah Mandiri. The model used is a model with multiple regression analysis to determine the effect of independent factors on the Net of Profit Margin of Islamic Bank. The result from the statistical analysis shows a relationship of Net Profit Margin (NM) and its independent factors i.e. the Islamic Bank Balance Sheet Structure, SBI (Interest rate) and Bank's Capital. This research suggests the Islamic Bank to use rate of profit concept instead of rate of interest because it will inherently bring stability to Islamic Financial Market.

Copyright

© 2016, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Trisiladi Supriyanto
PY  - 2016/08
DA  - 2016/08
TI  - The Role of the Rate of Profit Concept in Creating Islamic Financial Market Stability
BT  - Proceedings of the 2016 Global Conference on Business, Management and Entrepreneurship
PB  - Atlantis Press
SP  - 125
EP  - 133
SN  - 2352-5428
UR  - https://doi.org/10.2991/gcbme-16.2016.22
DO  - 10.2991/gcbme-16.2016.22
ID  - Supriyanto2016/08
ER  -