LITERATURE STUDY AND DEVELOPMENT MODEL

II. LITERATURE STUDY AND DEVELOPMENT MODEL

2.1. Agency Theory

This theory emerged after the phenomenon of separation of corporate ownership between stakeholders with a manager of capital, so that the classical theory of the firm could no longer be used as a basis of analysis. In the classical theory of the firm, company owners are entrepreneurial, take control of the company, make decisions in the life of the company. Agency theory to answer by describing what things are likely to happen, when penggelolaan the company submitted to the agent by the shareholder (principal), and whenever the agent using borrowed funds to run its activities, conflicts of interests will occur either between the agent (manager) with principal (shareholders) as well as between the principal (shareholders) with the principal (lender).

Jensen and Meckling (1976) describes an agency relationship in agency theory (agency theory) that the company is a collection of contract (nexusof contract) between the owner of the resource costs (principal) and the manager (agent) who took care of the use and control of these resources. According Meisser, et al., (2006:

7) the agency relationship has resulted in two problems: (a) the occurrence of asymmetric information (information asymmetry), where management generally has more information about the financial position sebenarya and the position of the operating entity of the owner ; and (b) conflicts of interest (conflict of interest) as a result of inequalities of interest, where management does not always act in the interests of the owners.

In an effort to overcome or minimize agency problems this raises the cost of agency (agency cost) will be borne by both the principal and the agent. Jensen and Meckling (1976) share the costs of this agency be monitoring costs, bonding costs and residual loss. Monitoring costs are costs incurred and borne by the principal to monitor the agent's behavior, which is to measure, observe, and control the behavior of the agent. Bonding costs are costs borne by the agent to set danmematuhi mechanisms to ensure that the agent will act

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untukkepentingan principal. Furthermore, residual loss is reduced prosperity yangberupa sacrifice principal as a result of perbedaankeputusan agent and principal decisions. According Schoeck (2002: 81) the application of risk management can reduce agency costs and enhance shareholder value. Risikoperusahaan management can also be a monitoring mechanism and lower asymmetric information and contribute to avoid opportunistic behavior of managers (Kajuter et al., 2005).

2.2. Internal Control System

Mulyadi & Kanaka P (1998) argue that internal control is a process that is run by a board of directors, management and other personnel, designed to provide reasonable assurance of achieving the following three categories of interest:

1) Reliability of financial reporting

2) Compliance with laws and regulations

3) Effectiveness and efficiency of operations According to Theodore M.Tuanakotta (1982), internal control is included plans and all methods coordinated policy in an enterprise to secure their wealth, test accuracy and the extent to which accounting data can be trusted, manggalakkan business efficiency and encourage compliance with policies outlined.

According to AICPA translated by Zaki Baridwan (1990), internal control includes organizational structure and all the ways and means of coordinated used in the company for the purpose of maintaining the security of company property, checking the accuracy and correctness of accounting data, maintain compliance with wisdom management that has been preset. The elements of the Internal Control system according to Mulyadi (1993)

responsibilities explicitly. The organizational structure is a framework of shared responsibility to a functional organizational units established to carry out the main activities of the company. The division of functional responsibilities within the organization based on the principles as follows:

1. The structure

a. Must be separated operating functions and storage of operating functions.

b. Not a duplicate departemenpun given responsibility to carry out all stages of a transaction. The separation of the operating functions, storage and accounting are held may reflect not be held liable sesungguhnya.Jika separation between the functions of the accounting data generated can not be credible, and as a result the organization wealth for their safety.

2. The system of authority and recording procedures that provide adequate protection against wealth, income and debt costs. In organizations, each transaction occurs only on the basis of the authorization of the official who has the authority to approve the transactions tersebut.Oleh for the division of authority to authorize the implementation of the transaction is a need to be made. Good procedures will guarantee that the data will be recorded in the form recorded in the accounting records with the level of precision and high reability. This will generate information that accurately and reliably about wealth, liabilities, revenues and expenses.

3. Practice healthy in performing their duties and functions of each organizational unit. The division of responsibility and authority systems and recording procedures that have been set will not be performing well if not created a way to menjanmin healthy practices in the implementation, the way in which are:

a. The use of numbered printed form that its use should be accounted for by the authorities.

b. Spot inspections, carried out without prior notice to examined, with irregular schedules.

c. Every transaction should not be executed from start to finish by a single function or organizational unit, without any interference from people or other organizational units.

d. Turnover of routine office will be able to maintain independent officials in performing their duties, so that conspiracy between them can be avoided.

e. Retrieval must leave for eligible employees.

f. Periodically matching of physical wealth to his notes.

g. Establishment of an organization unit to check the effectiveness of the elements of the internal control system to another.

4. Employees whose quality is in accordance with the responsibilities jawabnya.Karyawan honest and expert or competent in their area of responsibility will be able to perform the job efficiently and effectively. Although only a few elements that support the internal control system. It shows the elements of qualified employees is an element of the control system is crucial.For get the element competent and trustworthy, can be done in various ways including:

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a. Selection of candidates is based on the requirements demanded by the work required. A good program in the selection of candidates will menjamindiperolehnya employees who have the competencies required by the office which shall be occupied.

b. Development of employee education during employment companies sesuaidengan demands of the job. Ramdhani and Sucipto (2009) states, Credit also have a strategy that can lead to credit management becomes very important. The purpose of credit management is that banks can improve the health and performance, with an increase in the quantity and quality of credit. The quantity of credit assessed on the amount and rate of growth in lending. Loan quality, in a simple and concise and can be measured from the number of non-performing loans (non perfoming loans).

2.3. Akad Mudharobah

Technically mudaraba is a contract of business cooperation between the owner of the funds and fund managers to conduct business, profits are divided on the basis of revenue sharing by agreement of both parties, while in case of the loss will be borne by the owner of the funds unless caused by misconduct, Negligence or violation by the fund manager.

Mudharabah a financing transaction or investment that is based on trust. Trust is the most important element in mudharabah, that is the belief of the owner of the funds to the fund manager. Therefore, trust is an important element in terms of the mudaraba English called trust financing. Own funds are investor-called beneficial ownership or sleeping partner and fund managers called the managing trustee or partner labor. (Syahdeini, 1999). While financing (financing) that the financing provided by one party to another to support the planned investment, either by themselves or institution or in other words is the financing of funding incurred to support the planned investment. (Muhammad, 2005: 17). Whereas in (Arthesa, 2006: 102) Financing is the provision of cash or the equivalent, based on agreements between the bank and other parties who require the financed party to return the money or the charges after a certain period of time in exchange or for the results , Financing is one of the main tasks of financial institutions, namely providing facilities for provision of funds to meet the needs of the parties who are deficit units. (Arthesa, 2006: 113). Meanwhile, according to banking law number 10 of 1998, financing is the provision of cash or the equivalent, based on agreements between the bank and its customers that require clients to return the money or the charges after a certain period of time in exchange or for the results

In mudharabah, owner of the funds should not require a specific number to bagiannnya because it can be equated with usury that is requesting the advantages or rewards without balancing factor (iwad) allowed syariah.Hikmah of mudaraba system is able to provide relief to manusia.Terkadang there are some people who have possessions, but were unable to make it productive. Sometimes, too, there are people who do not own property, but he has the ability to memproduktifkannya. So with mudharabah both parties can benefit from the cooperation formed.

2.4. Non Performing Financing

Non Performing Financing or NPF in Islamic financial institutions, as well as non-performing loans / NPL conventional banks, arising because of problems that occurred in the internal approval process in bank financing, or after the financing was provided. However, NPF and NPL occurred on a different system. Islamic banking system has a fundamental factor that can withstand timbulya NPF order does not extend, however, the conventional banking system to provide greater opportunities for the NPL.

Fundamental factors underlying the transaction are as berikut.Dari assets side of the balance sheet, Islamic banks only know the word "financing" as the main activity, and do not lend money as the bank loan konvensional.Pemberian money in Islamic banks are social, and not flowering. Commercial transactions carried out through the sale to the murabaha contract, tenancy by the Ijara contract, and work together to run an establishment / business with mudaraba or Musharaka.

Funding should not contain usury. Riba or interest, which is determined in advance whether profitable or loss-making businesses, clearly manambah business risk. Greater risk will encourage NPF / NPL. In mudharabah, banks as shahibul mall provides capital to finance the business carried on by the customer as mudharib. In contract musharakah, banks and customers to finance and run a business together. In this contract, the gain is a common interest for financial institutions and customers, which will then be divided based on a ratio determined at the beginning wanted to cooperate. This common interest can boost transparency information that is more open, and reduce the incidence of moral hazard, to every party in the

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transaction, thus reducing business risk or risk financing / credit for the pihak.Setiap the contract contains an element of justice, which is lawful and shared benefits are compensating business risk is shared.

At the macro level, the concept of fractional banking in the conventional banking encourage the creation of "liquidity accounting" or higher credit or credit besar. Likuiditas this, if not controlled its use, can cause failure of the bank or banking crisis / keuangan.Banyak financial crisis in the world starting with financial liberalization in order to create greater liquidity, to increase economic growth; however, leads to a lending boom and large NPL pula.Pada finally, every crisis that reduce economic growth and cause unemployment, debt overhang, as well as a huge financial burden for taxpayers pajak.Oleh therefore, can be said to increase the growth of the tap credit growth tends to create false.

Cause NPF / NPL in terms of internal financial institutions are the same, which is associated with factors of knowledge / expertise finance / credit, professionalism and integrity, and the levels of spirituality from officials of his, corporate culture, credit / financing culture in the institution, morality leaders ( moral leadership), as well as reward and penalty system right. In terms of process, it is necessary to check the reputation of the potential consumers, due diligence and care, and supervision of finance / internal credit. Cause of the NPF / NPL after financing / loans granted are at the customer level, which deals with issues of honesty and trustworthiness, expertise in business, commitment to businesses followed, and moral commitment to keep janji.Semua must be observed from the outset, either by the institution conventional financial or islamic financial institutions, with the use of internal factors and external factors.