OPTIMAL ANALYSIS OF SELECTED FINANCINGS CONTRACTUAL PERFORMANCE OF ISLAMIC BANKS IN INDONESIA

Islamic banks has an important role in driving the national economy by carrying out its main business through financing. As the largest contributor to the income of Islamic banks, financing is the main factor in boosting operational performance. However, it cannot be denied that financing is a productive asset that is susceptible to risk so that it can interfere with operational performance. Therefore, this study mainly aims to find out the optimal threshold of the selected contractual instruments in Islamic banks. The research objects are Mudharabah, Musharakah, Murabahah, and Istishna. The purpose of this research is ultimately to find the optimal limit that can be tolerated which will contribute to improving the operational performance of Islamic banks. This study shows that To achieve an optimal level, Mudharabah growth must be in the range of 1% to 4% and Musharakah growth must be in the range of 3 % to 7%. Meanwhile, Murabahah and Istishna are categorized as financings with low risk so that to reach an optimal level, Murabahah growth must be in the range of 2% to 3% and Musharakah growth must be in the range of 1% to 3%, can be increased to exceed the optimal level.