Enhancing performance: minimizing risk in Islamic banks in Indonesia

Figures & data

Figure 1. Research conceptual framework.

Table 1. Variables, indicators, measurements and scales.

Variables	Indicators		Measurements	Scales
Sharia Capital Structure (X1 : Independent Variable - 1)	1	Liability	(Total Liability/ Total Asset) × 100%	Ratio
	2	Temporary Shirka Fund	(Total Temporary Shirka Fund / Total Asset) × 100%	Ratio
	3	Equity	(Total Equity/ Total Asset) × 100%	Ratio
Sharia Financing Structure (X2 : Independent Variable-2)	1	Murabahah Financing	(Total Murabahah Financing / Total Financing) × 100%	Ratio
	2	Mudarabah Financing	(Total Mudarabah Financing / Total Financing) × 100%
	3	Musharaka Financing	(Total Financing Musharaka / Total Financing) × 100%
Good Corporate Governance (X3 : Independent Variable - 3)	1	Self Assessment	Ranking 1–5	Interval
	2	Members of The Board of Commissioners	∑ Members of The Board of Commissioners	Ratio
	3	Board of Commissioners Meeting	∑ Board of Commissioners Meeting	Ratio
	4	Member of the Board of Directors	∑ Member of the Board of Directors	Ratio
	5	Board of Directors Meeting	∑ Board of Directors Meeting	Ratio
	6	Member of the Sharia Supervisory Board	∑ Member of the Sharia Supervisory Board	Ratio
	7	Sharia Supervisory Board Meeting	∑ Sharia Supervisory Board Meeting	Ratio
Risk (Z : Intervening Variable)	1	Credit Risk	Ranking 1–5	Interval
	2	Market Risk	Ranking 1–5	Interval
	3	Liquidity Risk	Ranking 1–5	Interval
	4	Operational Risk	Ranking 1–5	Interval
	5	Law Risk	Ranking 1–5	Interval
	6	Reputation Risk	Ranking 1–5	Interval
	7	Strategic Risk	Ranking 1–5	Interval
	8	Compliance Risk	Ranking 1–5	Interval
	9	Rate of Return Risk	Ranking 1–5	Interval
	10	Equity Investment Risk	Ranking 1–5	Interval
Financial Performance (Y : Dependent Variable)	1	Return on Asset	ROA Ratio	Ratio
	2	Return on Equity	ROE Ratio	Ratio
	3	Operational Efficiency Ratio	REO Ratio	Ratio

Table 2. Outer loading.

Variable	Indicators	Loading factor	Significance
Sharia Capital Structure	Temporary Shirka Fund	1.0000	Valid
Sharia Financing Structure	Mudarabah Financing	0.8540	Valid
	Musharaka Financing	0.9030	Valid
Good Corporate Governance	Board of Commissioners Meeting	0.9020	Valid
	Board of Directors Meeting	0.9480	Valid
Risk	Liquidity Risk	0.8800	Valid
	Market Risk	0.8470	Valid
	Operational Risk	0.9160	Valid
	Law Risk	0.7820	Valid
	Strategic Risk	0.9260	Valid
	Compliance Risk	0.8940	Valid
	Reputation Risk	0.9260	Valid
	Rate of Return Risk	0.7830	Valid
	Investment Risk	0.7670	Valid
Financial Performance	ROA	0.9740	Valid
	ROE	0.9610	Valid

Source: SmartPLS Output.

Table 3. Average variance extracted (AVE).

	AVE	Critical value	Result
Good Corporate Governance	0.856	>0,5	Meet
Financial Performance	0.936	>0,5	Meet
Risk	0.714	>0,5	Meet
Sharia Capital Structure	1.000	>0.5	Meet
Sharia Financing Structure	0.772	>0.5	Meet

Source: SmartPLS Output.

Table 4. Validity of Fornel-Larcker Criterion Discriminants.

	Good corporate governance	Financial performance	Risk	Sharia capital structure	Sharia financing structure
Good Corporate Governance	0.925
Financial Performance	0.006	0.967
Risk	−0.341	−0.081	0.845
Sharia Capital Structure	0.068	−0.274	−0.032	1.000
Sharia Financing Structure	0.186	−0.344	−0.515	0.130	0.879

Source: SmartPLS Output.

Table 5. Cross loading.

	Good corporate governance	Financial performance	Risk	Sharia financing structure	Sharia Capital Structure
Board of Directors Meeting	0.9480	0.0540	−0.3560	0.1730	0.1000
Board of Commissioners Meeting	0.9020	−0.0620	−0.0620	0.1710	0.0140
Return on Asset	−0.0090	0.9740	−0.0790	−0.3720	−0.2770
Return on Equity	0.0230	0.9610	−0.0780	−0.2860	−0.2510
Law Risk	−0.2740	0.1820	0.7820	−0.5610	−0.0850
Rate of Return Risk	−0.1390	−0.3090	0.7830	−0.2730	−0.2730
Investment Risk	−0.2130	−0.2280	0.7670	−0.2620	−0.0180
Compliance Risk	−0.1900	−0.0220	0.8940	−0.4610	−0.0650
Liquidity Risk	−0.4260	−0.1860	0.8800	−0.3370	0.0030
Operational Risk	−0.3900	−0.1210	0.9610	−0.4500	0.0550
Reputation Risk	−0.2320	0.1460	0.7900	−0.5630	−0.0690
Strategic Risk	−0.3620	−0.1980	0.9260	−0.4450	0.0520
Market Risk	−0.3620	−0.0350	0.8470	−0.4460	−0.1130
Mudarabah Financing	0.1680	−0.0290	−0.4490	0.8540	0.1020
Musharaka Financing	0.1590	−0.3810	−0.4580	0.9030	0.1250
Temporary Shirka Fund	0.0680	−0.2740	−0.0320	0.1300	1.0000

Source: SmartPLS Output.

Table 6. Construct validity and reliability.

	Cronbach’s Alpha	Rho_A	Composite reliability	Average extracted variance (AVE)
Good Corporate Governance	0.836	0.894	0.922	0.856
Financial Performance	0.932	0.958	0.967	0.936
Risk	0.949	0.958	0.957	0.714
Sharia Financing Structure	1.000	1.000	1.000	1.000
Sharia Capital Structure	0.708	0.725	0.871	0.772

Source: SmartPLS Output.

Table 7. Values variance inflation factor.

	Good Corporate Governance	Financial Performance	Bank risk	Sharia Capital Structure	Sharia Financing Structure
Good Corporate Governance		1.136	1.038
Financial Performance
Risk		1.492
Sharia Financing Structure		1.022	1.019
Sharia Capital Structure		1.386	1.051

Source: SmartPLS Output.

Table 8. R Square.

	R Square	Adjusted R Square
Financial Performance	0.257	0.213
Risk	0.330	0.300

Source: SmartPLS Output.

Table 9. Effect size (f²).

	Value	Influence
Good Corporate Governance > Financial Performance	0.000	Small
Risk > Financial Performance	0.106	Small
Sharia Capital Structure > Financial Performance	0.064	Small
Sharia Financing Structure > Financial Performance	0.235	Keep
Good Corporate Governance > Risk	0.094	Small
Sharia Capital Structure > Risk	0.003	Small
Sharia Financing Structure > Risk	0.319	Keep

Source: SmartPLS Output.

Table 10. Indirect effect.

	Original sample (O)	Sample average (m)	Standard Deviation (STDEV)	T-Statistik (O/STDEV)	p-values
Good Corporate Governance > Risk > Financial Performance	0.088	0.094	0.045	1.970	0.049
Sharia Financing Structure > Risk > Financial Performance	0.163	0.166	0.068	2.405	0.038
Sharia Capital Structure > Risk > Financial Performance	−0.016	−0.018	0.035	0.454	0.650

Source: SmartPLS Output.

Table 11. Path coefficients.

	Original Sample (O)	Sample average (m)	Standard Deviation (STDEV)	T-Statistik (O/STDEV)	p-values
Good Corporate Governance > Financial Performance	−0.005	−0.071	0.084	0.061	0.951
Good Corporate Governance > Risk	−0.256	−0.267	0.057	4.466	0.000
Risk > Financial Performance	−0.343	−0.348	0.134	2.563	0.011
Sharia Capital Structure > Financial Performance	−0.221	−0.215	0.086	2.575	0.010
Sharia Capital Structure > Risk	0.047	0.049	0.090	0.519	0.604
Sharia Financing Structure > Financial Performance	−0.491	−0.501	0.072	6.836	0.000
Sharia Financing Structure > Risk	−0.474	−0.482	0.078	6.056	0.000

Source: SmartPLS Output.

Data availability

The data supporting the findings of this study are available from the corresponding author and second author upon reasonable request.