1240 Evi Maulida Yanti 1 , AFMJ Volume 3 Issue 01 January 2018 Account and Financial Management Journal e-ISSN: 2456-3374 Volume 3 Issue 01 January-2018, (Page No.-1240-1246) DOI:10.18535/afmj/v3i1.03, I.F. - 4.614 © 2018, AFMJ The Effect of Third Party Funds, Financing to Deposit Ratio and Non Performing Financing toward Financing and its Impact on Profitability of Indonesian Sharia Banking (Studies at Sharia Commercial Banks Period 2011-2015) Evi Maulida Yanti 1 , Muhammad Arfan 2 , Hasan Basri 3 1 Master of Accounting, Syiah Kuala University, Indonesia. 2.3 Faculty of Economics and Business, Syiah Kuala University Indonesia. Abstract: This study aims to examine the influence of third party funds, financing to deposit ratio and non performing financing toward financing and its impact on profitability of Indonesia sharia banking. This study is a hypothesis testing research and the data are collected through the financial statements of each bank from 2011 to 2015 on the official website. The population in this study is 57. The results show that (1) third party funds, financing to deposit ratio, and non performing financing affect financing of Sharia Commercial Banks in Indonesia, (2) financing mediates the influence of third party funds, financing to deposit ratio, and non performing financing on profitability of Sharia Commercial Bank in Indonesia. Keywords: Third party funds, financing to deposit ratio, non performing financing, financing, profitability. INTRODUCTION According to Kashmir (2005, p.9), Bank is "a business entity that collects funds from the public in the form of savings and distributes them to the public in the form of financing in order to improve the lives of many people". Through banks, the excess funds can be given to the parties who need them and it can provide benefits for both parties. According to Hasibuan (2005, p.27), bank which is based on the service payment system is divided into two, namely "bank based on interest payment (conventional) and bank based on payment in the form of profit sharing (sharia)". Muhammad (2005, p.13) explains that Islamic banks are "banks that operate by not trading on interest. In other words, Islamic Bank is a financial institution whose main business provides financing and other services in payment and money circulation with its operations are adjusted to sharia principles". Sharia banking as part of the national banking system plays an important role in the economy of a country. Therefore, the role of BUS in Indonesia is very important for the growth of the Indonesian economy. In addition, the number of BUS in Indonesia continues to increase. In 2011 to 2013, the number of Sharia Commercial Banks is 11 Banks while in 2014 to 2015 the number of Sharia Commercial Banks has increased to 12 Banks. As more Sharia Banks emerge, there is intense competition in achieving the bank’s profitability. According to Kashmir (2015, p.196), "Profitability ratio is the ratio to assess the ability of companies in seeking for profit, this ratio also provides the measure level of management effectiveness of a company. Based on the data from each Sharia Commercial Bank that has been collected, it can be explained that the profitability of Sharia Commercial Bank has decreased, where the profitability of Sharia Commercial Bank in 2011 is 1.94%, and it decreased to 1.59% in 2012, then in 2013 it decreased to 1.24%, followed by 2014 that decreased to 0.96% and in 2015 it also decreased to -0.90%. In addition, the total disbursed financing in 2011 is Rp 7,641.41 billion, and in 2012 it has increased to Rp 10,131.72 billion, then in 2013 it also increased to Rp 12,549.19 billion, but in 2014 it decreased to Rp 12,384.26 billion and in 2015 it also has increased to Rp 12,889.24 billion. This phenomenon becomes interesting to investigate about the factors that are predicted affecting financing and its impact toward theprofitability. Based on the phenomenon as well as the survey of literature that has been done, the financing is a predicted factor that can affect profitability. This is based on several previous research results, such as Ali (2004), Yadiati (2006), Giannini (2013), Said and Tumin (2011), Rosita and Rahman (2011), and Ratnawati and Ranianti (2014) who said that financing has a positive effect on profitability. It means that the more financing is made, the higher the value of profitability is received. Besides affecting profitability, financing is also estimated to be affected by third party funds (Yadiati, 2006; Rosita and Rahman, 2011; Olokoyo, 2011; Rimadhani and Erza, 2011; and Wardhiantika and Rohmawati, 2014), financing to deposit ratio (Cleopatra, 2008; Rahman and Ridha, 2012; Kusumawati, 2013; Prastanto, 2013; Giannini,