Islamic Banks' Halal Profitability Analysis: Evidence from Oman

Abstract

The opportunity presented by modern living allows us to celebrate the many exquisite and distinctive religious traditions and to bring to light the many advantages that their preservation offers to society. Commercial banks were founded in a framework distinct from the Islamic context, with distinct foundational ideals and paradigms. As a result, most Muslims have not largely accepted those banks. In Oman, where the banking system transformed from regular public banking services to Islamic banking services to meet the demands and requirements of the Sharia complaint system where interest is not utilized as guided by Islamic economics. Hence, the focus of this research is on the halal earnings of Islamic banks. The primary goals of this study are to empirically investigate and assess the elements influencing the halal profits of Islamic banks in Oman while emphasizing significant data about banking performance that can aid decision- and policy-makers in the banking sector. The research subject was covered by secondary data, where the financial statements for Bank Nizwa and Al-Izz Bank for the five years from 2017 to 2021 were received from the Muscat Stock Exchange. In addition to using quantitative research to determine the relationships, this study was undertaken to investigate the halal profit of Islamic banks. Halal profit guarantees that the bank's earnings are obtained ethically and legally, in accordance with the standards and principles held by its clients. Halal profit also boosts clients' trust in Islamic banks. The discussion in the paper is anticipated to serve as a road map for a future initiative to elevate Islamic banking through an unwavering focus on innovation and the desire to provide excellence in everything banks do, including the creation and provision of a wide array of integrated products and services that are perfectly in line with Sharia principles.