Profitability Of Commercial Banks Research Articles

The influence of Natural Certainty Contract (NCC) and Natural Uncertainty Contract (NUC) financings on the financial sustainability of Islamic commercial banks in Indonesia

IntroductionResearch on Islamic banking in Indonesia has extensively addressed its performance and stability. However, studies on stability from the perspective of Natural Certainty Contract and Natural Uncertainty Contract financing have been relatively scarce.ObjectivesThis study measures how profitability mediates the impact of Natural Certainty Contract (NCC) financing and Natural Uncertainty Contract (NUC) financing on financial sustainability.MethodThe research utilizes secondary data obtained from quarterly reports for the periods I-IV of 2018-2022 on the official website of Sharia commercial banks. All Sharia commercial banks in Indonesia listed in the OJK for the period 2018-2022 constitute the population for this study, while the sample consists of Sharia commercial banks in Indonesia that meet the criteria. The sampling method employed is purposive sampling, resulting in eight Sharia commercial banks in Indonesia as the sample based on predetermined criteria.ResultsThe findings of this study indicate that NCC financing negatively influences profitability, NUC financing has no impact on profitability, NCC financing positively influences financial sustainability, NUC financing negatively influences financial sustainability, profitability (ROA) positively influences financial sustainability, NCC financing indirectly negatively affects financial sustainability through profitability, and NUC financing indirectly has no impact on financial sustainability through profitability.ImplicationsIslamic commercial banks should be more selective in financing allocation, focusing on options with lower risks. Furthermore, Islamic commercial banks should also manage financing effectively to minimize existing risks, thereby enhancing profitability.Originality/NoveltyThis study contributes to enrich studies in the field of Islamic finance with emphasize on Islamic commercial banks profitability and financial sustainability.

Impact of Monetary Policy on the Profitability of Nepalese Commercial Banks

This study examines the impact of monetary policy instruments on firm profitability in Nepalese commercial banks from 2007/08 to 2021/22. The research investigates the relationship between profitability and various monetary policy instruments, including broad money supply, statutory liquidity ratio, bank rate, investment in treasury bills, and cash reserve ratio. The analysis reveals diverse return on investment (ROI) trends across banks, with NIMBL initially showing high ROI followed by a drop, SBL and SBI displaying substantial increases, and NABIL and HBL maintaining stable ROI. Net Interest Margin (NIM) analysis shows varying profitability, while monetary policy indicators exhibit diverse and occasionally fluctuating values, influencing borrowing costs and liquidity. Correlation analysis identifies positive associations between NIM, M2, and ROI and negative correlations with TBR and CRR. Regression analysis emphasizes the significance of CRR, IRS, and M2 in impacting ROI. The study concludes that the cash reserve ratio, bank rate, and investment in treasury bills affect Nepalese commercial banks' profitability. Recommendations include managing the cash reserve ratio, maintaining low bank rates, encouraging treasury bill investment, and minimizing the statutory liquidity ratio to enhance profitability. Implications suggest that effective management of monetary policy instruments can improve banks' profitability. Future research could explore additional profitability indicators, expand the sample size and observation years, include other financial institutions, and employ a mixed-method approach for a comprehensive understanding of the impact of monetary policy instruments on bank profitability.

Analisis Pengaruh Kinerja Keuangan terhadap Profitabilitas pada Bank Umum Konvensional di Indonesia

Conventional commercial banks have an important role in the Indonesian economy by being a pillar in raising and distributing funds and providing various financial services to the public, a deep understanding of the financial performance of these banks is related to their level of profitability. This study aims to analyze the effect of financial performance on profitability in conventional commercial banks in Indonesia during the period 2018-2022. The data used in this study was obtained from the Indonesia Stock Exchange (IDX) with a sample of 16 conventional commercial banks and used panel data regression analysis techniques. The results of the analysis show that Net Interest Margin (NIM) has a positive and significant influence on Return on Assets (ROA) and Operating Expenses and Operating Income (BOPO) has a negative and significant influence on ROA. However, the variables Capital Adequacy Ratio (CAR), and Loan to Deposit Ratio (LDR) did not have a significant effect on ROA in 16 conventional commercial banks in Indonesia during the study period.

The Effect of Bank Performance and Macroeconomics on the Profitability of Indonesian Sharia Commercial Banks

The Effect of Bank Performance and Macroeconomics on the Profitability of Indonesian Sharia Commercial Banks

Impact of Credit Risk and Macroeconomic Variables on the Profitability of Commercial Banks in Nepal

This study was conducted to examine the impact of credit risk and macroeconomic variables on the profitability of commercial banks in Nepal. Return on assets and earnings per share of the banks were taken as regrassands. Whereas, as regressors, non-performing loan, capital adequacy ratio and credit to deposit ratio were taken as the proxies of credit risk, and GDP growth rate, consumer price index and base rate were studied as indicators of macroeconomic variables. Following simple random sampling techniques, 14 commercial banks were selected as sample for the study. The required quantitative data were retrived from annual financial reports of the banks. Data were analyzed on Gretl software. The Pearson correlation and Ordinary Lease Square model for regression resulted that the GDP growth rate was insignificant in defining the variation on return on assets. Likely, inflation and base rate were not significant in defining the variation on earning per share. Result of this study provided sufficient scope to bankers in developing their growth strategies.

The Impact of Mudharabah Sukuk and Foreign Exchange on the Profitability of Islamic Commercial Banks in Indonesia

The Impact of Mudharabah Sukuk and Foreign Exchange on the Profitability of Islamic Commercial Banks in Indonesia

An Investigation of the Impact of Mobile Money Services on the Profitability of Commercial Banks in Zambia

This paper sought to determine the impact of mobile money services on the profitability of commercial banks in Zambia. The study was guided by three objectives; (i) To examine the level of use of mobile money services in Zambia; (ii) to assess the measures of financial performance in the banking industry and (iii) to establish the relationship between the use of mobile money services and financial performance of the banking industry. The study applied both qualitative and quantitative research approaches mainly descriptive correlation design. The target population comprised of workers in all the commercial banks, mobile money operators (MMOs) and regulators and bank experts from Zambia Information and Communications Technology Authority (ZICTA) and Zambia Institute of Bankers (ZIOB) located in Lusaka central business district. A sample of 156 respondents was chosen using purposive sampling techniques to select retail, operations, customer service and finance department employees from banks and MMOs and two experts from ZICTA and ZIOB as key informants. Data were collected using questionnaires administered via Google forms sent to WhatsApp contacts and email addresses of respondents. Data were and analyzed using SPSS statistical packages to generate descriptive statistics (mean and standard deviations) and inferential statistics (regression analysis). The findings of study were presented in form of means, standard deviations, Pearson’s linear correlation coefficient and linear regression analysis. According to the findings of the study, it was indicated that there is generally a high level of use of mobile money services in the banking industry observed from a high level of reliability and accessibility to the services (Means of 3.71 and 4.17 simultaneously). The findings also indicated that there is a high level of financial performance reflected by a high level of profitability (Mean=4.52) in the banking industry, a high level of loan supervision (Mean=3 .85) and relatively high revenue sources (Mean=4. 11) for the banks. It was also indicated that there is an insignificant relationship between mobile money services use and financial performance in terms of profitability of banking industry (Sig. Value=0.2l2). It was also indicated that there is an insignificant relationship between mobile money services use and loan portfolio management of the banking industry (Sig. value=0.605). Finally, it also indicated that there an insignificant relationship between mobile money services use and revenue of banking industry (Sig. Value=0.435). The study thus recommends that commercial banks in Zambia which have not yet collaborated with MMOs should adopt the use of mobile money services on their platforms as it is highly reliable, accessible and reduces congestion in bank premises by customers who come to make transactions. This will help to boost financial performance in the banking industry.

Impact of Capital Adequacy on Profitability of Commercial Banks in Nepal

Purpose: This study aims to assess the impact of capital adequacy on the profitability of selected commercial banks in Nepal. It specifically measures and evaluates the capital adequacy ratios and profitability ratios of the selected Nepalese commercial banks. Methods: The research employs descriptive and casualcomparative research designs, using a sample of one governmentowned bank and one private sector bank in Nepal. The study analyzes CCR, SCR, and CAR to measure capital adequacy and ROE, ROA, and NPM to measure profitability. Findings: The study finds that the capital position of the commercial banks is adequate according to the capital adequacy framework 2015 and unified directives number one of NRB. However, profitability ratios of the sample Nepalese commercial banks are high but decreasing over the past 10 years. The correlation between ROE and capital adequacy variables is very weakly positive, while the correlation between NPM and capital adequacy variables is weakly positive. However, the correlation between ROA and capital adequacy variables is weakly negative. The regression analysis finds insignificant results, indicating that capital adequacy has not made any significant impact on profitability. Value: The study provides insights into the impact of capital adequacy on the profitability of commercial banks in Nepal, contributing to the understanding of the banking sector in Nepal. It also highlights the decreasing trend in profitability ratios and the insignificant impact of capital adequacy on profitability. Keywords: Capital adequacy, Profitability, Commercial banks, Nepal, CCR, SCR, CAR, ROE, ROA, NPM

The Impact Of Working Capital Management On The Profitability Of Listed Banks: The Ghanaian Economy Experience

The study examined the impact of working capital management practices on the profitability of banks listed on the Ghana Stock Exchange from 2012 to 2022. The study had three specific objectives to determine the relationship between cash conversion cycle and profitability; to determine the relationship between acid ratio and profitability of banks, and to determine the relationship between loan to deposit ratio and profitability of banks. The study was quantitative in nature and used secondary data (audited financial records of banks listed on the Ghana Stock Exchange from 2012 to 2022) of five banks. The data were retrieved purposively. Stata (StataCorp, Texas, USA) was used to analyze the data. The linear regression model was used to analyze the data after Pearson correlation was done. The study found a negative significant association between cash conversion cycle and return on capital employed after controlling for bank size, leverage and debt. This was consistent with study’s hypothesis. This implies that effective cash management is key to commercial banks performance. Also, acid ratio was positive and significantly associated with profitability of banks. Again, the profitability of commercial banks is accounted for by loan to deposit ratio. The study concludes that the profitability of banks is significantly associated with working capital management. That is, when working capital is well managed, commercial banks are better able to meet their short-term commitments as and when they fall due. This enables the commercial banks to operate efficiently without any interruptions. It is recommended that finance managers of commercial banks list on the Ghana Stock Exchange pay external attention to the cash position of their banks at all times.

Risk Management and Financial Performance of Commercial Banks in Nigeria.

This study establishes the degree to which risk management has impacted profitability of commercial banks with the aim of contributing to improving the financial performance improvement. This study used secondary data from listed banks extracted from Central Bank of Nigeria list of financial institutions. The study was 2012 to 2021. The sample size of fourteen commercial banks in Nigeria was utilized for the study. Data were analysed using descriptive, Pearson correlation, r and Multiple linear regression (ANOVA) r statistical analysis. Findings were that the Pearson results posted significant relationships among credit risk, operational risk as measures of risks with profitability measures of net interest margin except the liquidity risk. The linear regression result indicated that Credit risk has significant effect on Net interest margin. However, there is no significant effect of liquidity and operation risk on net interest margin of commercial banks in Nigeria. The findings suggest that effective risk management strategy play a key role in commercial banks profitability in Nigeria. Therefore, this study recommended that effective risk management framework to improve financial performance.

PENGARUH DPK, NPF DAN ZPR TERHADAP PROFITABILITAS DENGAN FDR SEBAGAI MODERASI

Based on the phenomenon regarding the development of Return on Assets (ROA) in Islamic banking in Indonesia in recent years, which shows the occurrence of fluctuations in developments and descriptions of what factors influence the financial performance of Islamic banking based on existing theory, there is an inconsistency in this research, namely the use of the moderating variable, namely Financing to Deposit Ratio (FDR), to see the relationship between DPK, NPF, and ZPR on ROA. The results of this study show that DPK has a negative and significant effect on the profitability of Islamic commercial banks. Non-performance financing has a negative and insignificant effect on the profitability of Islamic commercial banks. ZPR has a negative and insignificant effect on the profitability of Islamic commercial banks. This is caused by the fact that most Islamic commercial banks payments of zakat are not yet perfect, namely 2.5% of their assets, which have reached the ratio. Or even not paying zakat at all. and for the variable financing deposit ratio, it is able to moderate the effect of DPK and NPF on the ROA of Islamic Commercial Banks. However, the financing deposit ratio variable is not able to moderate the effect of ZPR on the ROA of Islamic commercial banks. Which means FDR is not a moderating variable on the effect of ZPR on the ROA of Islamic commercial banks.Keywords: Profitability; ZPR; FDR

Does the Staff Bonus Fund Decrease the Net Profit? Empirical Insights from Nepalese Commercial Banks

This study investigates the impact of staff bonus funds, return on assets (ROA), and non-performing loans (NPLs) on Nepalese commercial banks' net profit. It also compares the individual effects of independent variables on the net profit of commercial banks. The unbalanced panel data of 11 commercial banks were gathered from various central bank reports and economic surveys of Nepal. It employs a descriptive and exploratory research design. To investigate the relationship between dependent and independent variables, statistical and econometric tools such as summary statistics, association analysis, Johnsen- Fisher and Kao co-integration test, Hausman, Breusch-Pagan, Chow test, and standardized panel fully modified ordinary least square (PFMOLS) are used. Non-performing loans hurt the calculation of net profit. The net profit of Nepal's commercial banks drops by 0.323 units for every one percent increase in non-performing loans. Similarly, a 0.234 unit increase in Nepalese commercial banks' net profit is linked to every unit increase in return on assets. The staff bonus fund is more responsible for increasing commercial banks' net profit than return on assets. This study assists policymakers in determining that employee bonuses are not only an expense but also a profit-generating tool for motivating and attracting skilled individuals. It contributes to developing appropriate strategies to reduce non-performing loans and boost the ROA of Nepalese commercial banks.

Impact of Macroeconomic and Bank-Specific Variables on the Profitability of Commercial Banks in Nepal

The study aims to investigate how macroeconomic and bank-specific factors affect Nepalese commercial banks’ profitability. The panel data were collected from 16 Nepalese commercial banks for the fiscal year 2006/07 to 2020/21. The bank’s profitability is measured by net interest margin (NIM) and return on assets (ROA). The bank-specific variables considered in this study are bank size, capitalization, credit risk, deposit-to-total-assets ratio, capital adequacy ratio, and credit-to-deposit ratio. In addition, interest rate, broad money supply, inflation rate, and growth rate of the GDP are used as macroeconomic independent variables. The results of random effect model showed that the most significant bank-specific factor influencing Nepalese commercial banks’ profitability is bank size. Furthermore, the results reveal that the bank-specific factors namely bank size, credit risk, deposit-to-total assets, capital adequacy ratio, and credit-to-deposit ratio significantly increase net interest margin (NIM). Regarding the macroeconomic factors, the findings have explored that interest rates, inflation, economic growth, and the size of the money supply all significantly affect NIM. However when it comes to ROA, the data demonstrate that, aside from interest rate, all macroeconomic factors significantly affect the bank’s profitability as determined by ROA.

Impact of bank-specific and macroeconomic factors on The profitability of Commercial Banks in Sri Lanka

The objective of this research study is to investigate the impact of Bank specific and Macroeconomic indicators/forces on the Profitability of the Listed Commercial banks in Sri Lanka. Balance panel data regression analysis mode was used to analyze the data. Data for each macroeconomic and bank-related variables were collected with the assistance of secondary resources and it covers a period of 13 years commencing from the year 2006 up to 2018. The study sample contained nine licensed commercial banks that cover both the private and government sector. The study employed ROA and ROE as dependent variables while using exchange rate, GDP growth, inflation, lending interest rate, unemployment rate, BOP, Central government debts, operating margin, deposits, loan to assets, debt to equity, capital adequacy, loans to deposits and assets size as independent variables. Inflation, Balance of payments, Central government debts, operating margin, loans, equity debt, and capital adequacy variables were positively correlated with both ROA and ROE while the rest of the variables indicated a mixed effect under two regression models. Many existing studies on Banks profitability have focused either on Bank specific or macroeconomic variables but this study focused on both bank specific as well as macroeconomic factors giving equal weight for both factors as well as extending existing literature by including variables such as central government debts and BOP.

Exploring the Impact of Loan Loss Provision on Profitability: An Analysis of Commercial Banks in Nepal

Background: The central bank closely examines the loan loss provision maintained by Nepalese commercial banks in order to minimize potential losses resulting from a rise in non-performing loans, which reduces bank capital and squeezes the profitability and sustainability of banks. Establishing the relationship between loan loss provision and profitability is crucial in assessing the financial performance and risk management effectiveness of commercial banks. This analysis enables banks to minimize loan loss provisions, reinforcing profitability and ensuring long-term sustainability through the implementation of appropriate credit policies. Objectives: This research aims to analyses the influence of loan loss provision on the profitability of commercial banks in Nepal. The study also takes into account pertinent variables: non-performing assets, loans and advances to total deposits, and capital adequacy which may affect the relationship. Methods: This study has used both the descriptive and causal-comparative study approaches. The study used a panel data set consisting of 105-year observations, spanning from fiscal year 2017/18 to 2021/22, including 21 presently active commercial banks.The return on assets (ROA) is the dependent variable and loan loss provision (LLP) is an independent variable. The Fixed Effect (FE) panel regression has been chosen as an appropriate model as suggested by the Haussmann test. Results: A panel regression model has found a negative and substantial connection between the provisions for loan losses with the Nepalese commercial banks’ profitability. Conclusion: The study concluded that the increased provision for loan losses adversely affects the profitability of commercial banks in Nepal. Therefore, commercial banks should carefully evaluate their loan portfolios, carry out thorough credit risk assessments, and adopt sensible policies to maximize profit and ensure financial stability.

Capital Adequacy and its Influence on Bank Profitability in Nepal

Background: Capital is a fundamental component for any organization's existence and operation. It serves as the lifeblood for initiating and sustaining businesses, regardless of their scale. The purpose of the research is to evaluate the financial performance of Nepalese commercial banks' capital adequacy ratios. Considering the performance of Nepalese commercial banks, it explicitly investigates the impact of capital adequacy ratio, cost income ratio, debt to equity ratio, equity capital to assets, bank size, and liquid ratio.Methods: This study investigates the impact of capital adequacy on the profitability of commercial banks in Nepal, utilizing secondary data from all commercial banks spanning 2013 to 2022. Analyzing 20 commercial banks, the research reveals that Nepalese commercial banks, on average, generate a respectable profit with typical return variance. The Capital Adequacy Ratio (CAR) consistently surpasses the 10% regulatory threshold, ensuring compliance with Basel III requirements and NRB directives. Results: The Average Assets Ratio (AAR) signifies a proactive approach to lending, contributing to enhanced profitability, while the Government Securities to Total Investment Ratio (G-STIR) indicates risk-averse practices with investments in risk-free assets. The Non-Performing Loans Ratio (NPLR) reflects the challenge of balancing low returns and high risk associated with non-performing loans. Correlation coefficients reveal complex relationships, indicating that increased capital, debt, and non-performing loans may lead to reduced profitability for Nepalese commercial banks. Regression analysis reinforces these findings, highlighting significantly negative correlations between Return on Assets (ROA), Return on Equity (ROE), and spread with capital adequacy determinants, and a positively insignificant relationship between government securities, total investment, and profitability metrics. Conclusions: The study explored capital adequacy determinants (CAR, D-ER, AAR, G-STIR, NPLR) and their impact on bank profitability in Nepal. CAR had no significant effect on ROA, exhibiting a negative correlation. Conversely, D-ER and Advances-to-Assets Ratio positively influenced ROA. G-STIR showed a positive relationship without significance, while NPLR had a significantly negative impact. Non-risk-weighted measures, particularly debt-equity, negatively affected profitability. The study highlighted the limited impact, suggesting a more nuanced capital management approach, emphasizing D-ER and Advances-to-Assets Ratio. Consideration of macroeconomic factors and a balanced capital structure are crucial for commercial banks in Nepal.

The Impact of Non-Performing Loans Ratio on Banking Profitability in the Albanian Banking System

Most of the studies have determined credit risk as the biggest risk among all other risks with a direct impact on the financial performance of a bank. The main objective of any bank, like any business unit, is to maximize shareholder value, so we considered it important to treat the impact of one of the most important bank’s risks on its profitability. Bank profitability and the non - performing loans ratio (NPLR) are the two main concepts in our study. This study aims to investigate the relationship and the stability over time of this relationship between the non - performing loans as the main indicator of credit risk management and profitability of commercial banks in Albania. The linear regression model is used to test the hypothesis raised in the study which tests the relationship that exists between the credit risk management indicator and bank profitability indicators. NPLR is taken as a representative indicator of credit risk management and ROE (return on equity) and ROA (return on assets) are taken as representative indicators of bank profitability. The statistical analysis in the study showed a negative impact of the NPLR indicator on the two indicators of bank profitability in our country. The findings of our study constitute a valuable contribution to banks and policy makers because a strong banking system motivates the financial stability of a country and increases the elasticity of economies to face economic crises. To conduct the study, we faced difficulties and challenges in finding a long time series of data for all the indicators taken in the study for each of the commercial banks operating in Albania. Although we were not able to provide the data for each commercial bank, we overcame this difficulty by taking the total data from the official website of the Bank of Albania. Taking into consideration that the banking history in Albania is relatively short we managed to find data for an 8-year study period which we used in our study.

Non-Performing Assets and Profitability of Joint Venture Banks in Nepal

This study examines the impact of non-performing assets and profitability of commercial banks in Nepal. Out of 27 commercial banks, five joint venture banks have been selected as sample based on descriptive and analytical technique. Secondary data was collected from the annual reports of five selected commercial banks for the period of 2011/12 to 2020/21. Data have been collected and analyzed by using mean, standard deviation, and correlation and regression analysis. The profitability in terms of return on assets (ROA), return on equity (ROE) and profitability are selected as dependent variables. Non- performing assets (NPA), capital adequacy ratio (CAR) and total loan to total deposit ratio (TLTD) are taken as independent variables. The finding indicates that NPA has significant impact on the profitability of Nepalese joint venture banks. The result shows that ROE has been found a positive impact on the NPA, CAR and TLTD. Thus, this study concludes that non-performing assets is an important predictor for the profitability of the bank. Therefore, the success of the bank in term of profitability depends on its non-performing assets.

AN ANALYSIS OF THE IMPACT OF NON-PERFORMING ASSETS ON THE PROFITABILITY OF SRI LANKAN COMMERCIAL BANKS

Licensed commercial banks are considered entities that participate in financial intermediation, which bears risks in carrying out their activities. This study focused on analyzing how non-performing loans and advances, collectively non-performing assets, impact the profitability of commercial banks. The study focused on the Sri Lankan context of the phenomenon, where the commercial banking sector has received less attention than in other countries. The Central Bank of Sri Lanka's economic data library is the primary source of secondary data for this study. The target population of the study consisted of licensed financial institutions in the Sri Lankan banking sector, from which 24 licensed commercial banks were readily selected. Time-series data from 2001 to 2020 on the variables were collected to guarantee that reforms in the banking sector continued throughout the time. E-Views version 10 was used to conduct the statistical analysis of the data. The regression analysis results show that non-performing assets have a significant impact on the net profit of commercial banks in Sri Lanka and that the relationship between the variables under consideration is negative, leading to the conclusion that non-performing assets harm the net profit of commercial banks in Sri Lanka. The researcher encourages future studies to focus on a diverse sample to acquire a thorough perspective of Sri Lanka's banking sector. The study provides valuable insights to Sri Lankan commercial banks in managing credit risk associated with their operations.

The influence of financial performance on profitability of sharia commercial banks in Indonesia using the CAMEL method

IntroductionResearch on Islamic commercial banks in Indonesia have been extensively conducted, with a focus on banks in general and large banks. However, research specifically targeting medium-sized banks, namely PT Bank Muamalat Indonesia, PT Bank Mega Syariah, PT Bank Panin Dubai Syariah, PT Bank BCA Syariah, and PT Bank KB Bukopin Syariah, is still limited.ObjectivesThis study aims to examine the influence of the financial performance of Islamic banks on their profitability using the CAMEL indicator.MethodThis research is quantitative with a correlational approach. The population in this study consists of 12 Islamic commercial banks in Indonesia, with 5 of them selected as samples. The sampling technique used is purposive sampling. The study utilizes secondary data from quarterly financial ratio reports of Islamic banks published by the Financial Services Authority (OJK). The analysis involves evaluating the impact of CAR, NPF, NOM, BOPO, and FDR on ROA using multiple linear regression analysis.ResultsThe findings indicate that, partially, CAR and NPF do not significantly affect the ROA of Islamic banks. However, NOM, BOPO, and FDR have a significant impact on the ROA of Islamic banks.Implicationsthe research motivates Islamic bank management to improve their financial ratios to meet the health criteria set by Bank Indonesia (BI) and OJK. Maintaining healthy financial ratios has implications for the level of trust that customers and potential customers have in Islamic banks and ultimately determines the long-term existence of these banks.Originality/NoveltyThis study contributes to the development of risk management theory by examining the factors influencing the fluctuations in the values of CAR, NPF, NOM, BOPO, and FDR on the ROA of Islamic banks.