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[ECO 204] ASSIGNMENT

CITRA WIDURI / Oct 17th 2022

ECONOMETRIC (ECO 204) ASSIGNMENT

LECTURE : DADANG MULJAWAN, PhD.
STUDENT NAME : CITRA WIDURI
STUDENT ID : 3212210006
SUBJECT PAPER TITLE : FACTORS INFLUENCING CORPORATE ZAKAT EXPENDITURE (CASE STUDY OF
ISLAMIC BANKS IN INDONESIA PERIOD 2015-2017)
PAPER AUTHOR : RIZKY UTARI, HILDA MONOARFA, AND SRI YAYU NINGLASARI ,
DEPARTMENT OF ISLAMIC ECONOMICS AND FINANCE, UNIVERSITAS
PENDIDIKAN INDONESIA
PAPER ANALYSIS :
STEPS ANALYSIS
1. Statement of theory Corporate zakat issued by the Islamic Banks (BUS) in Indonesia is likely
or hypothesis. to be influenced by several factors: profitability ratio in this case is
Return on Assets (ROA), Return on Equity (ROE), and firm size. There are
also blessings in the assets of the company.

Return on Asset (ROA) describes the extent of the return on the total
assets owned by the company (Bank Indonesia, 2012). With good
financial performance, banks will tend to issue zakat in accordance with
religious provisions and statutory provisions.

Return on Equity (ROE) is a measurement of income available to

company owners (both ordinary and preferred shareholders) for the
capital they invest in a company

Firm size is a scale, which can classify the size of the company in various
ways, including: total assets, long size, stock market value etc
2. Specification of the Dependent Variable: Corporate Zakat Expenditure
mathematical model Independent Variable : Return on Assets (ROA), Return on Equity (ROE)
of the theory. & Firm Size.

Mathematical model for each variable is described below:

Corporate Zakat = (cash + short-term investment + inventory + net trade

receivables) −(short-term liabilities).

𝐼𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑡𝑎𝑥

ROA = x 100%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡

𝐼𝑛𝑐𝑜𝑚𝑒 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥

ROE = x 100%
𝐸𝑞𝑢𝑖𝑡𝑦

Firm Size = Ln Total Asset

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[ECO 204] ASSIGNMENT
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3. Specification of the The research conducted Chow Test and Hausman Test as panel data
statistical, or regression selection.
econometric, model.
From the Chow Test, we have the chi-square value is equal to 0.0000,
which is smaller than the alpha of 0.05 (F<0.05). This means there is near
zero redundant fixed effect.
Furthermore, the Hausman test result shows that the chi-square value is
equal to 0.3166, which is greater than the alpha of 0.05. This means the
panel data regression has correlated random effects.
Additionally, the Langrange Multiplier (LM) test is considering that
T(number of time series unit) is larger than N(number of cross-section
unit)

All three tests show that Fixed Effect Model (FEM) is the best model used
with the estimation model as follows:

𝑌𝑡𝑖 = 𝑋𝑡𝑖𝛽 + 𝑐𝑖+𝑑𝑡 + 𝜀𝑡𝑖

4. Obtaining the data. The samples used were five Islamic Banks namely Bank Syariah Mandiri,
BNI Syariah, BRI Syariah, Bank Muamalat Indonesia, and Bank Mega
Syariah from 13 BUS which became the population in this study. This
research was conducted in the 2015-2017 period for three years or 36
months. The data used in this study is secondary data. In addition, data
collection techniques in this study are documentation studies obtained
from the five BUS annual financial reports, as well as monthly BUS
publication reports on the OJK website (www.ojk.go.id). Data collection
was also carried out through literature study.

5. Estimation of the From the regression estimation (using Pooled Least Squares),
parameters of the we have the variable below:
econometric model. 𝛽1 = ROA = 0,008396
𝛽2 = ROE = 0,558008
𝛽3 = Firm Size = 0,086733

C = -0,853410

Dummy variables to determine changes in intercepts:

T1 = BNI Syariah = 0,052983
T2 = Bank Syariah Mandiri = -0,005983
T3 = BRI Syariah = 0,037355
T4 = Bank Muamalat Indonesia = -0,126041
T5 = Bank Mega Syariah = 0,041687

Using all variables, we have the equation below:

Zakat BUS𝑖𝑡 = −0.853410 + 0, 008396𝑋1𝑖𝑡 + 0, 558008𝑋2𝑖𝑡 +
0,086733𝑋3𝑖𝑡 + 0, 052983𝐷1 − 0, 005983𝐷2 +0, 037355𝐷3
−0,126041𝐷4 + 0, 041687𝐷5 + 𝑒𝑖
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[ECO 204] ASSIGNMENT
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6. Hypothesis testing. 1. Multicollinearity test

The linear relationship between independent variables is described
below:

All the independent variables have a low coefficient that is under

0.8, which concludes that we have no multicollinearity here.

2. Heteroscedasticity test
The residual inequality from one observation to another variable in
the regression model is described below:

Can be seen that the profitability of each independent variable is

greater than 0.05, which concludes that we have no
heteroscedasticity

3. Partial test (t-test)

The influence of each independent variable on the dependent
would be tested based on the t-score from each against t-table
(1,973534). Below we have the result from Eviews application
program:

a. ROA to Corporate Zakat

t-score 0.3237 < t-table, which means accepting H0, and
rejecting H1. The probability level of 0.7466 is greater than the
alpha of 0.05, so it can be concluded that ROA has no effect and
is not significant on corporate zakat expenditure on BUS .
b. ROE to Corporate Zakat
t-score 4.5198 > t-table, which means rejecting H0, and
accepting H1. The probability level of 0.000 is smaller than the
alpha of 0.05, so it can be concluded that ROE has a significant
effect and positive direction toward corporate zakat
expenditure on BUS.
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[ECO 204] ASSIGNMENT
CITRA WIDURI / Oct 17th 2022

c. Firm Size to Corporate Zakat

t-score 3.149 > t-table, which means rejecting H0, and accepting
H1. The probability level of 0.0019 is smaller than the alpha of
0.05, so it can be concluded that Firm Size has a significant effect
and positive direction toward corporate zakat expenditure on
BUS.

4. The Simultaneous test (F-test)

F-statistic = 87.88856 is greater than F-table (2.66) and the
probability 0.0000 is smaller than the level of significance 0.05,
based on this result, the influence or attachment between
independent variables on the dependent variable is simultaneous.
ROA, ROE, and Firm Size are jointly influence corporate zakat
expenditure of Islamic Bank (BUS)

5. R-Squared
The determination coefficient (R2) explains how much the
percentage of the total variation of the dependent variable is
explained in the research model. This research using panel data
regression analysis with a fixed effect model shows that the adjusted
R-Square is 0.772618. This shows that 77.2618 percent of the
corporate zakat expenditure on Islamic Banks (BUS) can be
explained by the independent variables, namely ROA, ROE, and Firm
Size. While the rest (100 percent - 77.2618 percent = 22.7382
percent) is explained by other factors outside the research model.

7. Forecasting or Based on the equation model :

prediction. 1. When ROA increases 1%, the amount of the corporate zakat
expenditure on Islamic Banks (BUS) will only be increased by
0.008%
2. When ROE increases 1%, then the amount of the corporate zakat
expenditure on BUS will increase by 0.56%.
3. Every increase in Company Size by 1%, it will affect the increase
in corporate zakat issued by BUS by 0.09%.
4. The three above only explain 77% of corporate zakat
expenditure, and the rest 23% is explained by other factors
outside the model.
8. Using the model for Return on Asset (ROA) does not have a positive and significant effect on
control or policy the expenditure of corporate zakat on Islamic Banks in Indonesia. The
purposes. level of ROA that experiences fluctuating growth but tends to increase
has not been able to influence zakat issued by BUS. On the other hand,
ROE has a positive and significant effect on the expenditure of zakat on
BUS in Indonesia. If the profits incurred by the company on the income
available to the owners of the company for the capital they invest
experience an increase in the corporate zakat issued by the BUS will also
increase.