Can the Bank’s Intermediation Function be a Mediator between Third-Party Funds and Non-Performing Financing on The Profitability of Islamic Commercial Banks in Indonesia?

Abstract

. The purpose of this research is to examine whether the bank's intermediation function can become a mediator between third-party funds and non-performing financing on the profitability of Islamic commercial banks in Indonesia. In addition, this research also examines the direct influence of third-party funds and non-performing financing on the intermediation function and profitability. Using time-series data for the period January 2013 to February 2021, with purposive sampling technique. The analytical method used is path analysis, with the Bootstrapping technique. The results of the research show that the intermediation function has not been able to significantly mediate third-party funds and non-performing financing on profitability. Meanwhile, the direct effect of third-party funds and non-performing financing on the intermediation function is significant. As for the direct influence between third-party funds, non-performing financing, and the intermediation function on profitability, only third-party funds, and non-performing financing are significant.