The purpose of this paper is to analyze the influence of credit,
liquidity and operational risks in six Indonesian’s islamic banking
financing products namely mudharabah, musyarakah, murabahah, istishna,
ijarah and qardh, in order to try to discover whether or not Indonesian
islamic banking is based on the “risk-sharing” system. This paper relies
on a fixed effect model test based on the panel data analysis method,
focusing on the period from 2007 to 2013. The research is an exploratory
and descriptive study of all the Indonesian islamic banks that were
operating in 2013. The results of this study show that the Islamic
banking system in Indonesia truly has banking products based on
“risk-sharing.” We found out that credit, operational and liquidity
risks as a whole, have significant influence on mudarabah, musyarakah,
murabahah, istishna, ijarah and qardh based financing. There is a
correlation between the credit risk and mudarabah based financing, and
no causal relationship between the credit risk and musharaka, murabahah,
ijarah, istishna and qardh based financing. There is also correlation
between the operational risk and mudarabah and murabahah based
financing, and no causal relationship between the operational risk and
musharaka, istishna, ijarah and qardh based financing. There is
correlation between the liquidity risk and istishna based financing, and
no causal relationship between the liquidity risk and musharaka,
mudarabah, murabahah, ijarah and qardh based financing. A major
implication of this study is the fact that there is no causal
relationship between the credit risk and musharakah based financing,
which is the mode of financing where the islamic bank shares the risk
with its clients, but there is an influence of credit risk toward
mudarabah mode financing, a financing mode where the Islamic bank bears
all the risk. These findings can lead us to conclude that the Indonesian
Islamic banking sector is based on the “risk sharing” system.