Track your Manuscript
Enter Correct Manuscript Reference Number:
Get Details
Top Editors

Dr. Nanjappaiah H. M.
Assoc. Prof. Dept. of Pharmacology BLDEA’s SSM College of Pharmacy & Research Centre Vijayapur – 586103, Karnataka, India

Dr. Shek Saleem Babu
English Language and Literature, English Language Teaching, and Poetry, IIIT, RGUKT, Nuzvid, Krishna Dt. AP, India

Dinh Tran Ngoc Huy
Bank for Investment and Development of VietNam (BIDV)

Dr. Abd El-Aleem Saad Soliman Desoky
Professor Assistant of Agricultural Zoology, Plant Protection Department Faculty of Agriculture, Sohag University - Egypt

Prof. Dr. Elsayed Ahmed Ahmed Elnashar, Ph.D.
Full-Professor of Textiles &Apparel, Faculty of Specific Education, Kaferelsheikh, University, Egypt
Top Reviewers

Dr. Shabnum Musaddiq
Assistant Professor, Department of Microbiology, Narayana Medical College, Nellore, Andhra Pradesh, India, 524003

Dr. Biman Kumar Panigrahi
Associate professor, Seemanta Instt. of Pharma. Scs., Jharpokharia, Odisha, 757086, India

Efanga, Udeme Okon
Finance, Accounting and Economics, niversity of Calabar, Nigeria

Aransi Waliyi Olayemi
Department of Adult Education, University of Ibadan, Ibadan, Nigeria
Why Us
Open Access
Rapid publication
Lifetime hosting
Free indexing service
Free promotion service
More citations
Search engine friendly
Go Back       Himalayan Journal of Economics and Business Management | Volume:4 Issue:3 | June 26, 2023
98 Downloads207 Views

DOI : 10.47310/Hjebm.2023.v04i03.035       Download PDF       HTML       XML

Decisions on Capital Structure and Financial Sustainability in Islamic Rural Banks (Bprs) In Indonesia

Novilia Aisah, Hari Sukarno, Handriyono

Master of Management, Faculty of Economics and Business, University of Jember, Indonesia

*Corresponding Author

Novilia Aisah

Article History

Received: 10.06.2023

Accepted: 15.06.2023

Published: 26.06.2023

Abstract: This study aims to investigate the effect of capital structure decisions on the financial sustainability of Islamic rural banks (BPRS) in Indonesia through the contribution of non-profit sharing financing (murabahah). Researchers exposed secondary data from Islamic Banking Statistics, the Financial Services Authority (OJK) and analyzed using a two-stage regression technique during 2014–2022. The findings show that murabaha contributes 77.9% of total BPRS financing and is proven to influence capital structure and financial sustainability positively and significantly. Meanwhile, from a sustainability perspective, BPRS Indonesia has proven to be operationally sustainable, but not financially sustainable. This study supports the trade-off theory and encourages BPRS to carry out alternative strategies other than debt, for example, BPRS can optimize production sharing financing through mudharabah and musyarakah contracts and still accommodate profits through other instruments. This study contributes to the literature especially on financing structures in Islamic microfinance institutions and highlights the issue of financial sustainability, as well as practical implications for managers, micro-entrepreneurs, and regulators. Managers are expected to have the best capital structure design so that they can increase the profitability and sustainability of the institution, while entrepreneurs are expected to use BPRS as a means of investment and to fund their business. Regulators, especially the Sharia Supervisory Board (DPS) are encouraged to carry out sharia compliance assessments and be open to innovation and engineering of financial products to suit the needs of society.

Keywords: Capital structure, financial sustainability, microfinance institutions, Islamic rural banks (BPRS), financing

Copyright © 2020 Inlight Publisher (IARCON INTERATIONAL LLP). All Rights Reserved.