Financing Risk Mediates Internal Drivers of Islamic Bank Profitability

Risiko Pembiayaan Berperan sebagai Mediator bagi Faktor-Faktor Internal yang Mempengaruhi Profitabilitas Bank Syariah

Authors

  • Riyadh Firdaus Universitas Gunadarma
  • Peni Sawitri Universitas Gunadarma

DOI:

https://doi.org/10.21070/perisai.v10i2.2055

Keywords:

Profitability, Sharia Commercial Banks, Non-Performing Financing, Panel Data, Sharia Finance

Abstract

General Background: Profitability is essential for assessing financial performance and sustainability in Islamic banking. Specific Background: Islamic commercial banks experience varying financial performance despite continued asset growth, reflecting differences in internal financial conditions and macroeconomic developments. Knowledge Gap: Previous studies have reported inconsistent relationships between financial determinants and profitability, particularly regarding the mediating role of nonperforming financing. Aims: This study examines internal and external determinants of Islamic bank profitability through nonperforming financing as a mediating variable. A quantitative approach employed panel data from nine Islamic commercial banks during 2015–2024, analyzed using panel regression and Sobel mediation testing. Results: Capital Adequacy Ratio (CAR), Operational Efficiency Ratio (OER), and exchange rates demonstrated statistically significant relationships with profitability. Conversely, Financing to Deposit Ratio (FDR), gross domestic product growth, and inflation showed insignificant relationships. Nonperforming financing mediated the relationships between CAR, OER, FDR, and profitability but did not mediate those involving economic growth, inflation, and exchange rates. Novelty: The study integrates internal banking indicators and macroeconomic variables within a mediation framework, identifying differentiated pathways through financing quality. Implications: Capital adequacy, operational cost management, and financing quality represent important considerations for maintaining financial performance and supporting sustainable Islamic banking operations.

Highlights:

  • CAR, OER, and exchange rates demonstrated statistically significant direct relationships.

  • FDR, economic growth, and inflation showed insignificant direct associations.

  • Indirect pathways were supported for three banking indicators but not macroeconomic variables.

Keywords: Profitability, Sharia Commercial Banks, Non-Performing Financing, Panel Data, Sharia Finance

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Published

2026-10-31

Issue

Vol. 10 No. 2 (2026): October

Section

Islamic Banking

Categories

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Copyright (c) 2026 Riyadh Firdaus, Peni Sawitri

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