Volume V: Economy, Politics, and Environmental Governance

The Influence of Total Asset Turnover, Financing to Deposit Ratio, and Non-Performing Financing Ratio on Asset Growth Mediated by Net Profit Margin in Islamic Rural Banks in West Java, Indonesia

  • Kurnia Fatimah UIN Sunan Gunung Djati Bandung, Indonesia
  • Dedah Jubaedah UIN Sunan Gunung Djati Bandung, Indonesia
  • Iwan Setiawan UIN Sunan Gunung Djati Bandung, Indonesia
  • Setia Mulyawan UIN Sunan Gunung Djati Bandung, Indonesia

Keywords

Islamic Rural Banks, Total Asset Turnover, Financing to Deposit Ratio, Non-Performing Financing, Net Profit Margin, Asset Growth, Islamic Banking.

Abstract

Islamic Rural Banks (Bank Pembiayaan Rakyat Syariah/BPRS) play an important role in supporting economic development through financial intermediation activities based on Islamic principles. However, differences in financial performance among BPRS indicate that variations in asset management, financing distribution, financing risk control, and profitability may influence their ability to achieve sustainable asset growth. This study aims to examine the effect of Total Asset Turnover (TATO), Financing to Deposit Ratio (FDR), and Non-Performing Financing (NPF) on Asset Growth (AG) with Net Profit Margin (NPM) as an intervening variable in Islamic Rural Banks in West Java. The study is based on the perspective of Maqashid Syariah, particularly the concept of hifz al-mal (protection of wealth), which emphasizes responsible, productive, and sustainable wealth management in accordance with Islamic principles. This research applies a quantitative approach using secondary data obtained from quarterly financial reports of BPRS during the 2021–2025 period. The research sample was determined through purposive sampling based on specific criteria. Data analysis was performed using EViews 13 through panel data regression analysis, classical assumption tests, partial significance tests (t-test), simultaneous significance tests (F-test), coefficient of determination analysis, and mediation testing to evaluate the role of NPM in the relationship between financial ratios and asset growth. The results indicate that Total Asset Turnover (TATO) has a negative but statistically insignificant effect on Asset Growth, suggesting that asset utilization efficiency alone has not been sufficient to directly increase BPRS asset expansion. Financing to Deposit Ratio (FDR) has a positive and significant effect on Asset Growth, indicating that effective financing distribution contributes to strengthening bank asset growth. Non-Performing Financing (NPF) has a negative and significant effect on Asset Growth, demonstrating that higher financing risk can reduce the ability of BPRS to expand assets. Furthermore, Net Profit Margin (NPM) does not significantly affect Asset Growth and does not function as a mediating variable between TATO, FDR, and NPF on Asset Growth. The simultaneous test shows that TATO, FDR, NPF, and NPM jointly influence Asset Growth, although the model explains only a limited proportion of the variation in asset growth. The findings suggest that BPRS should prioritize effective financing distribution, improve financing quality, and strengthen risk management practices to achieve sustainable asset growth. Future studies are recommended to include broader Islamic banking institutions, longer observation periods, and additional financial and macroeconomic variables to provide a more comprehensive understanding of factors influencing Islamic banking growth.

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