THE EFFECT OF FUNDAMENTAL FACTORS AND MACROECONOMIC VARIABLES ON THE CAPITAL BUFFER OF ISLAMIC BANKS

Banks are trust institutions. The tools that are appropriate to support this trust are the capital adequacy of the bank (capital buffer), related to the ability of banks to detect the risks faced. This study discusses the effects of financing risk (NPF), operational risk (BOPO), market risk (NI), profitability (ROA), bank size (SIZE), Gross Domestic Product (GDP), and money exchange (M2) on buffer capital (M2) CAR) BUS in Indonesia during the period 2010-2018, both partially and simultaneously. The data used are quantitative data with panel data regression methods using statistical tools stata13. This research uses secondary data while the study population is 14 Islamic commercial banks which then obtained a sample of 11 BUS based on the purposive sampling method. NPF, NI, SIZE, GDP, and M2 have a significant effect on CAR, where NI and M2 have a positive effect, and NPF, SIZE, GDP affect negatively. Related to expenditure risk variables, market risk, bank size, GDP, and money that can be issued as determined by the BUS capital buffer in Indonesia in the period 2010-2018. Operational Risk (BOPO) and profitability (ROA) have no significant effect on BUS capital buffers (CAR) in the study period. Regarding implementation of Basel III, funding risk and market risk are significant determinants of capital buffers, and capital buffers are found to be procyclical to Indonesia's finances.

Keywords: capital buffer, risk profile, macroeconomic conditions, basel III.

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