Islamic Banking Industry Research Articles

14-The Role of Islamic Banking Industry in The Perspective of Global Financial Sector and its Impact in Pakistan's Economic Growth

The Islamic financial industry is flourishing at a fast speed in Pakistan. It right now possesses a portion of over 8% of the nation's complete financial area. As Islamic Republic of Pakistan is a creating financial system, every area should add up to its monetary growth. The monetary area additionally adds to Pakistan's monetary development, which incorporates customary banking area and Islamic banks. At constant, there are five full obligation of Islamic terminology banks working in Pakistan, alongside other regular banks that give Islamic financial administrations. This review expects to look at the job of the Islamic financial area in Pakistan's monetary development. For this reason, the monetary information of the 5 Islamic banks were taken from their fiscal summaries from the second from last quarter of 2006 to the final quarter of 2011 and the country's genuine GDP information from the wellspring of the State Bank of Pakistan. Different factual apparatuses have been utilized to inspect the effect and job of the Islamic financial area on the country's monetary development. though the monetary execution of the Islamic financial area decidedly affects financial growth, as Islamic lending attractions in greatest of finance clients because of faith; while the benefit of the Islamic pecuniary area has following to no effect in bright of the fact that Islamic Al banks are new to the realm and experience issues creating a gain for their buyers, as in Sharia law. that the resource nature of Islamic banks agrees with the resource nature of conventional banks and autonomously affects Pakistan's monetary development. The general outcomes show that if there should be an occurrence of minor changes in the economic design of the Islamic monetary industry and by expanding the monetary productivity of this industry, it can imagine a substantial part in the monetary development of Pakistan.

The Influence of Leadership Styles and Work Motivation on Employees Performance of Islamic Banks

This paper aims to determine the influence of leadership style and work motivation on employee performance at Bank Mandiri Syariah Palu Indonesia. This study employed a quantitative study, and the data were collected through a survey. There were 48 samples in this study. We used the saturation sampling technique to determine the samples because all populations were recruited for the samples. The data were analyzed using multiple linear regression analysis. The results show that leadership style and work motivation simultaneously affect employee performance at the Bank Mandiri Syariah Palu Indonesia. Among those variables, leadership style has a more significant effect on employee performance. In contrast, work motivation has less influence on employees' work performance, but it still plays a role in the employees' work performance. Our study contributes to better strategy in managing leadership and works motivation to enhance employees' work performances within Islamic banking industries.

COMPARATIVE ANALYSIS OF THE EFFICIENCY OF ISLAMIC BANKING IN INDONESIA BEFORE AND DURING COVID-19 PANDEMIC

In 2019, COVID-19 starts to become a global emergence and keeps spreading all over the world. It has begun to enter Indonesia in February 2020 and has developed the social restriction and lockdown policy that leads to the decline in the economy. In contrast, the Islamic banking industry has escalated marginally in the past century. As a business entity, Islamic Banking has to maintain its business performance, one of which is by measuring the efficiency of the bank. The aim of this study is to analyse whether the Islamic Banking industry is disrupted by the occurrence of the COVID-19 pandemic, by measuring the efficiency of Islamic Banking. This study uses the Data Envelopment Analysis method with Variable Return to Scale model in output orientation. The variables used are based on the Intermediation approach which are Third Party Funds with Total Assets for the input, and Financing with Operating Income for the output. The samples are from all of the Islamic Banks in Indonesia in 2019-2021 except PT Bank Net Indonesia Syariah (total of 13). After calculating the efficiency, to see whether there is a difference between the Islamic Banks' efficiency before and during the COVID-19 pandemic, the Kolmogorov-Smirnov and Mann-Whitney U Test are used. The result of this study is that the Islamic banks in Indonesia have not been efficient both before and during the COVID-19 Pandemic, with a score of 68,12% for before and 69,64% for during pandemic. Moreover, the correlation analysis using the Mann-Whitney U test result indicates that the efficiency score before and during the COVID-19 pandemic has no significant difference. Hence, this illustrates that the occurrence of the COVID-19 pandemic didn’t affect the Islamic Banking industry in Indonesia, particularly on their efficiency.

Determinants of Mudharabah Term Deposit: A Case of Indonesia Islamic Banks

The growth of Islamic finance industries in Indonesia has shown significant improvement. The increased number of surplus units depositing their funds in Islamic banks has become a significant factor in their trust and confidence in Islamic banking products. One of the products utilized by the depositor is the mudharabah deposit product, where the Islamic bank offers higher profit compared to other types of deposit or saving. This paper aims to analyze the issues in a mudharabah term deposit in the Islamic banking industry in Indonesian Islamic banks. The issues concern more on the profit and risk in the mudharabah concept that has been applied in Islamic banks and the variables that affect the changes in mudharabah deposit product. We used the sample to analyze the issues by selecting 14 Islamic banks in Indonesia from 2011-2020. This research uses a quantitative approach with multiple linear regression analysis methods. Several variables are considered the independent variables to know the changes in the demand of mudharabah deposits in the Islamic bank, including interest rate, profit rate, number of office or branch units, and non-performing financing. Our analysis shows that the number of offices or branch units and non-performing financing positively impact the changes in demand of mudharabah deposits, while the interest rate and profit rate have a negative impact on mudharabah deposits.

Value- based Islamic banking and reporting in Bahrain

PurposeThis paper aims to analyse whether the practices of Islamic banks in Bahrain are in line with value-based Islamic banking (VBIB) and reporting disclosure in the annual reports towards achieving their fundamental objectives of human-centred economic development and social justice.Design/methodology/approachBased on Islamic finance, Islamic economic principles and perception of Maqasid al-Shari’ah, this paper examines and assesses the current practices of Islamic financial institutions (IFIs) in Bahrain through content analysis of financial and annual reports of Islamic banks in Bahrain and interviews of Islamic banking experts.FindingsThe findings reveal that value-based banking (VBB) has not been translated fully into practice by the Islamic banks in Bahrain.Research limitations/implicationsThe data analysis was restricted to Islamic banks in Bahrain.Practical implicationsThis paper identifies the need for reporting standard development to improve the VBB practice in Bahrain in the future. Looking at the objectives of the IFIs, this paper introduces the concept of VBB in Bahrain, which includes ethical banking, responsible banking and social responsibility. The study adds value not only to the current Islamic finance literature but also helps many stakeholders, including prospective academics, who may conduct comparative studies in different jurisdictions throughout the world.Originality/valueThe specific contribution of this paper is the identification of the VBB practices and related disclosure in the Islamic banking industry in Bahrain. The study is useful to harmonise and standardise the practices of VBIB by the contemporary Islamic banks in Bahrain.

Regulation not Mere Legislation: The Issue of Enhancing Islamic Banking Performance Across Nigeria

The subsisting economic hardship underscores the promotion of financial stability through inclusive financial regulations. The low-performance of conventional policies warrants the striving for uniform regulation and protection of conventional and non-interest financial institutions. In Nigeria, financial regulations do not pay attention to inventive Islamic financial products and Islamic delivery mechanisms. This situation does not help to achieve a positive performance in Islamic banking services in the country. Via a review of previous literature, this paper aims to discuss the policies of the Central Bank of Nigeria (CBN) on conventional and Islamic banking systems. The review outcomes suggest that only restricted policies are available for non-interest financial institutions across Nigeria, and the existing protections are far from creating long-term welcoming results. According to the review outcomes, many studies are not conclusive about the particular aspects that need improvements between regulation and legislation of financial institutions in Nigeria. We argue that existing regulations do not treat all financial systems equitably, and thus, it becomes difficult for Islamic financial institutions to contribute efficaciously and positively to the country’s economic growth. A such, this paper recommends the re-composition of the regulatory framework on equitable protection basis for every financial institution across Nigeria. This review contributes to the existing literature on the heightening of the economic and financial system across Nigeria by proposing regulation and legislation amendments. Further research may explore how effective policies can be formulated to achieve a positive performance of Islamic banking in Nigeria.

Determinant of Market Share in the Indonesian Islamic Banking Industry

Market share determines the position of revenue and public utilization of Sharia bank. This research aims to examine the internal and external determinant factors of Indonesia Sharia banking market share. The secondary data were obtained from the Financial Services Authority (OJK) and Bank Indonesia (BI). Autoregressive Distributive Lag (ARDL) was used to explore the short and long periods from the influence of variables, including total of offices, customers, third-party saving (DPK), and promotion. The results showed that the total number of Automated Teller Machines (ATM) had a contrastingly different impact. Therefore, this research recommends adding all variables quantitatively.

Innovations in Islamic Banking on Conventional Banks (Study on Banking Industry Players)

To answer how big the rate of innovation made by Islamic Banks compared to conventional Banks from the perspective of banking industry players and to find out which innovations need to be improved so that Islamic Banks can compete with Conventional Banks. The research method used is quite easy, starting with a study using 100 samples of Islamic banking industry players and 100 samples of conventional banking industry players domiciled in the city of Bandung. Using the independent samples T-test, it can be seen that innovation in Islamic banks is still below the average compared to conventional banks. The use of the Independent-Samples T Test method for non-parametric statistics (Man Whitney U-Test) was used to evaluate the mean difference between two groups of unrelated samples. The results obtained are quite unique where a test is carried out whether it is true that Islamic banks are considered as innovations from conventional banks.

Validity of zakat ratios as Islamic performance indicators in Islamic banking: a congeneric model and confirmatory factor analysis

PurposeThere is much debate in the literature about how the performance of Islamic banks (IBs) should be measured. Basically, IBs’ business models are different from that of conventional banks; thus, the performance of IBs should be measured by using a Sharīʿah-based approach. This paper considers zakat (Islamic tax) as an alternative indicator to measure the performance of IBs. This paper aims to examine whether zakat ratios can be used as Islamic performance (ISPER) indicators for IBs besides the conventional performance (COPER) indicators.Design/methodology/approachThe investigation covered a sample of 214 yearly observations of 37 IBs located in Indonesia, Malaysia, Bahrain, Saudi Arabia and the United Arab Emirates for the period 2007–2015. This study used a single-factor congeneric model and confirmatory factor analysis, performed using the AMOS 23.0 software.FindingsThe findings assert that the discriminant validity of multi-bank performance, as measured by ISPER [zakat on assets (ZOA) and zakat on equity (ZOE)] and COPER indicators (return on assets, return on equity and operational efficiency in terms of assets), is very high. Hence, ISPER and COPER measurements are valid, either together to measure the multi-performance of IBs from both the Islamic and conventional perspectives, or independently as each measurement is valid to measure the Islamic and conventional performance if it is used separately.Research limitations/implicationsThis paper does not investigate whether the findings are constant across time. This represents one of the limitations of this study.Practical implicationsIt is strongly recommended that IBs calculate and disclose zakat ratios, particularly ZOA and ZOE, in their annual reports. Researchers and academicians should use these ratios for measuring the ISPER of IBs, either along with COPER or separately.Originality/valueEmpirical evidence is provided in this paper on the development and validity of zakat ratios as ISPER indicators in the Islamic banking industry. Zakat ratios are suitable indicators that can measure IBs’ performance and achieve the goals of IBs as well as those of Islamic economics. Technically, zakat has a dynamic ability to reflect the profitability of IBs. The more the IBs generate profit, the more they pay zakat. Furthermore, the greater the total assets of IBs, the higher the amount of zakat that they should pay. Thus, zakat ratios can be used as profitability measurements as in the case of tax ratios.

The impact of COVID-19 on Islamic banks in Bangladesh: a perspective of Marxian “circuit of merchant’s capital”

PurposeThis paper aims to assess the probable impact of COVID-19 on the Islamic banking system in Bangladesh. More specifically, it attempts to test the hypothesis that Islamic banks are exposed to increased risk because of their role as a provider of “merchant capital” including financing for trade, commerce and working capital, which are believed to be severely disrupted by the COVID-19.Design/methodology/approachThe paper draws upon the Marxian tradition on the identification of the circuit of “merchant capital” separated from the circuit of “interest-bearing capital.” Moreover, the research adopts the balance sheet approach to trace the sectoral distribution of investment as well as sources of income of Islamic banks.FindingsThe research supports the hypothesis that the investment pattern of Islamic banks is skewed toward the trade and merchant’s financing. More than two-third of Islamic banks’ investment, and income thereof, is concentrated on working capital and trade finance. As these sectors are largely vulnerable to the economic shock resulting from COVID-19, Islamic banks in Bangladesh are likely to be affected through this channel.Research limitations/implicationsThe research focuses only on Islamic banks in Bangladesh. Further study can assess the impact of COVID-19 on conventional and Islamic banks in other countries to find similarities and differences with the findings of the current research.Practical implicationsThe finding of this research will be useful for bank managers, policymakers and users of financial services. In particular, this study provides important information useful for regulators in devising appropriate policies which aim to mitigate the adverse impact of COVID-19.Originality/valueTo the best of the authors’ knowledge, this is the first study that attempts to examine the impact of COVID-19 on Islamic banking system in Bangladesh, a country where Islamic banks occupy one-third of the total banking system’s assets.

Globalization and the Growth of Islamic Banking: The Authorization Process in Italy

This paper endeavours to ascertain how Islamic banking may operate within the Italian legal system, given that neither the Rome I regulation, and the incorporation approach cannot be applied. There are three main research questions: i) which is the mainstream Western approach to Islamic banking?; ii) if Sharia rules are considered as a system of social rules and Islamic banking is compared to ethical banking or socially responsible banking, to which extent the Italian banking law is applicable to?; iii) can we suggest building up Sharia rules as a system of normative prescriptions? Globalization, Islamic banking, Sharia, Italian banking law, money, potential capital, usus, legal system, general clauses, lex mercatoria

Strengthening Integrated Inclusive System, Creates The Inclusive Islamic Banking Industry In Indonesia

Economic growth in Indonesia has averaged about 6% since 2008. Shariah- compliant financial service providers currently account for only 4.5% of total banking sector assets. Between 2008 and 2012, Islamic bank assets tripled, increasing by an average of 31.5% annually. Strong growth in the past five years was helped by the Shairah Banking Law introduced in July 2008. Since then, the number of Islamic banking outlets has increased from 241 to 517, comprising 11 fully Shariah-compliant banks, 24 Islamic banking units and 158 Shariah-compliant rural banks. Islamic bank’s network has spread with the number offices rising at a rate of 27% year-on-year. Community Service Responsibility (CSR), banking institutions should have to take part in social activities, integrated with the society, and "be part of non-Muslims". Blending in the sense of helping or supporting their programs that are good and useful, such as being a sponsorship or held a charity eventAs a country with largest Muslim population in the world, Indonesia is considered by global world, multiculturalism in Indonesia makes Islamic banking should be inclus ive. Inclusive Integrated System is one way to eliminate exclusivity Islamic banking which still there, the improvement in terms of branding, Corporate Social Responsibility (CSR), socialization, services, and product innovation

A comparative analysis of financial performance of Islamic banks vis-à-vis conventional banks: evidence from Pakistan

PurposeIn recent years, the fast growth of Islamic banks (IBs) has generated debates among policymakers and economists about the sustainability and performance of these institutions. This paper aims to undertake a comparative analysis of the financial performance of IBs and conventional banks (CBs) in Pakistan over the period 2008–2019 to evaluate how IBs are faring compared to their conventional peers.Design/methodology/approachThis paper considers Financial Ratio Analysis (FRA) to analyse and compare the performance of the top-10 IBs and CBs operating in Pakistan. The sample includes five full-fledged IBs and five CBs which offer Islamic windows in Pakistan. The top-five performing CBs offering Islamic windows have been selected in this study.FindingsThe results show that IBs are better capitalized, less risky and have higher liquidity as compared to CBs. In contrast, the profits of IBs are found to be lower than those of CBs.Research limitations/implicationsThe study has provided an analysis of financial performance only for Pakistan. A cross-country analysis could be more representative of the performance of IBs.Practical implicationsThe study infers that the size of the Islamic banking industry in Pakistan should be enhanced by opening new branches and promoting Islamic financial literacy.Originality/valueThe study assists investors, creditors, debtors and managers in making better decisions. It also provides the latest valuable information to regulators and policymakers that can be used to make rules and policies for the finance industry in Pakistan.

PENGARUH RASIO KEUANGAN TERHADAP PROFITABILITAS BANK UMUM SYARIAH DI ERA 4.0

The world today has entered the era of the industrial revolution 4.0, where this era greatly affects the various lifestyles of people around the world, including in Indonesia. One of the industries moving by 4.0 is the Islamic banking industry. The impact of using this technology should make Islamic banking operations more efficient, so that the profitability of Islamic banking in Indonesia will also increase. This study was conducted with the aim of looking at the profitability of Islamic commercial banks in Indonesia in the era of the industrial revolution 4.0 from 2013 to 2019. The population in this study was Islamic Commercial Banks registered by the Otoritas Jasa Keuangan in the period 2013-2019 with a sample of 11 Islamic Commercial Banks that corresponding. This research is a quantitative research with the data collection method used is documentation (library research), which uses bank financial reports published by the Otoritas Jasa Keuangan (OJK) as of December 31, 2013 to 2019. The variables used in this study consisted of CAR, NPF, NIM and BOPO. The results of this study indicate that the CAR and BOPO variables have an effect on ROA. While the NPF and NIM variables have no effect on ROA. Based on the results of the value of 82.48% of the coefficient of determination (R²) also shows that all the variables tested together are able to explain the effect that occurs on the ROA variable. The results of this study are expected to be a reference for Islamic banks according to business activities in Indonesia in an effort to improve operational efficiency so as to improve their performance and profitability.

Banking and Economic Growth: Comparison between Islamic and Conventional Banking in Malaysia

This study investigates the contribution of conventional banking and Islamic banking to economic growth in Malaysia. Return on assets, return on equity representing the profitability, total deposit, representing bank development, and several indicators such as total government expenditure, trade openness, and gross fixed capital formation were independent variables. In contrast, the dependent variable was GDP per capita. The study utilised secondary data collected from the Fitch Connect database and Datastream database. This study used a sample of 10 Islamic banking and 10 Conventional banking. The study found that the Islamic banking system variable can influence Malaysia's economic growth. ROA and Ltdep are found significant and have positive effect to economic growth, but ROE has adverse effects. On the other hand, the results show that ROA in Conventional bank does not have a relationship with economic growth. However, other banking indicators such as ROE and total deposit are significant to economic growth. Based on the ROE results, ROE Islamic bank contributes more to economic growth than Conventional bank because the percentage that contributes to the decreases of economic growth for Islamic banks is lesser than Conventional bank. The results also showed that Islamic banking provides an efficient channel for productive resources and monitors the use of the funds by the participation of business ventures, leading to bank profitability and then economic growth. This study also stressed on total deposit indicator as a proxy to bank development. This study found that total deposit for the both banking system is significant to economic growth. However, the contribution of banking development in conventional banking is much better than by Islamic banking. However, the gap of differences is too small, which shows that Islamic deposits can cope with conventional deposits.

Drawing ethical mentation in Islamic banks; addressing operational lines heterogeneity with special reference to Al-Ghazali’s ethical philosophy

PurposeThis study aims to examine the decision-making behaviour of Islamic banking practitioners of the United Arab Emirates with special reference to the operational line heterogeneity by employing factors that are religious in nature such as intellect, satanic force and divine knowledge as encapsulated in al-Ghazali’s ethical philosophy.Design/methodology/approachA total of 337 samples were collected from the Islamic banking practitioners in the United Arab Emirates using a purposive sampling technique, and the empirical analysis was conducted with the measures of model fit and bootstrapping technique using Partial least square Structural equation modelling and multi-group analysis.FindingsThe empirical findings reveal that the dedicated use of intellect in making decisions related to ethical issues where desires and emotions tend to overwhelm reason and human choices. While divine knowledge is found ineffective guidance of the intellect, the element of satanic force is found significantly impacting decision-making. As the lack of religious consciousness is evident among respondents, higher exposure to operational risk is expected. These findings were found identical across the Islamic banking practitioners in different lines of operations.Research limitations/implicationsThe span of the study is limited to a single country. Future studies are recommended to replicate the study to more markets where the share of Islamic finance is significant.Practical implicationsFindings of the study highly suggest respective authorities of Islamic financial institutions to intensify the capacity-building programs on the foundation of faith which includes Islamic thought and worldview, to enhance the corporate ethical decision-making. Moreover, equal importance should be given to all the banking practitioners regardless of line of business operations.Originality/valueWith undue emphasis is given to the juristic (fiqh) aspects of Shariah compliance in the Islamic banking and finance industry, less has been attempted to explore its ethical dimension (akhlaq) in the compliance parameters that leave a relatively large gap to address prevailing unethical practices in Islamic finance institutions. Findings from this study can be useful as a warning to the Islamic banking firms to enhance the sense of God-fearing and improve existing measures in the organisation in mitigating operational risks that may arise from people or system and consequently ensure the smooth governance of the Islamic banks.

Modes of Islamic financing and aggregate economic output: evidence from Islamic banking industry of Pakistan

With the evolution of Islamic banking, the economic impact of Islamic finance has been studied by many authors. Islamic banks significantly differ from conventional banks in terms of underlying contracts. The asset side of Islamic banks is composed of different modes of financing, which can be categorized at participatory and non-participatory modes of financing. This study aims to examine the relationship of modes of Islamic financing in connection to the real economic output of Pakistan. Using quarterly data from 2005 to 2019, we use autoregressive distributive lag (ARDL) model to analyze the impact of modes of Islamic financing and industrial output. Our findings reveal that non-participatory modes of Islamic financing play a significant role in deriving a healthy aggregate economic output. Therefore, Industrial production found to have a significant positive long run relationship with non-participatory Islamic financing. However, financing modes based on partnership does not have significant impact on total industrial production. The results also show that poor asset quality hinders the production process in the long run and decreases the economic outcome.

Islamic Defense Action Movement 212 in the Perspective of Muslim

In quantity, Indonesia has the biggest Muslim in the word. However, the history is a proof that political identity labeled Islam has never succeeded in Indonesian presidential election. This is inseparable from the friction among Muslims who are divided when they come into contact with the territory. Besides, the purity of Islam, especially in the eyes of the laity, seems tarnished if Islam is associated with political attachments. This term is deliberately raised by certain stakeholders to win the public domain since Indonesia is democracy system. The presence of the Islamic defense action 212 was able to catch an eye of the public at large when the divided Muslims have one common enemy (blasphemy of the al-Qur'an). This phenomenon gives a large political power as a rival for the incumbent. This is qualitative research with literature study method and analysis of the phenomenology of Islamic defense action 212. The reference taken is closely related to the information media that describes the public discourse about Ahok's defamation of the Quran to various sustainable Islamic defense action movements. The results of the research show that the 212 movement is neither a political movement nor Islamic mass organization but is a calling of the Muslim community in Indonesia who feels that their religion has been tarnished in the context of defamation of the holy verse of the Qur'an. Furthermore, Islamic defense action 212 establishes not only a political map in Indonesia but also other dimensions in the form of a Muslim-based business spirit such as the Muslim entrepreneurial center (212 mart). Koperasi Syariah 212 was supported by community figures, and the forerunner of the establishment of Islamic banking system in Indonesia.

IMPACT OF BANKING SECTOR DEVELOPMENT ON ECONOMIC GROWTH IN MALAYZIA

This research examines the experience of Malayzia, which was able to form strong banking entities after the severe economic crisis it was exposed to in 1997. Malayzia is one of the fastest countries to emerge from the Asian crisis. The importance of the research is represented in reviewing the country's banking experiences and the impact of reforms on economic growth in Malayzia during the period from (1980-2014). This research aims to identify the major developments that have taken place in the banking sector and to understand their results. Among the most important results of the research is a study of reforming the Malayzian banking sector, and the application of the privatization policy. Malayzia has achieved diversification in the traditional banking sector and the Islamic banking system, which coexist and work together. Among the most important indicators of the Malayzian banking sector, according to the balance sheets during the period (2007-2014), is the risk-weighted capital adequacy ratio, which reached an average of 10.9% and the basic capital adequacy ratio, which reached an average of 9.33%. Also, the return on assets ratio reached an average of 1.48%. Among the most important recommendations reached by the research is the necessity to adhere to structural reform programs and link them with economic, financial and legislative reform, work to merge small banks, increase bank branches and provide medium and long-term loans to create investment opportunities and obtain an appropriate profit margin.

Analisis Rasio Kinerja Keuangan Bank Muamalat Indonesia Pada Masa Pandemi Covid-19

Shari'ah banks in Indonesia began to develop when Bank Muamalat was established in 1991. Bank Muamalat, which used the shari'ah system during economic turmoil, was able to maintain stable financial performance. However, according to a Shari'ah economic observer who is also the founder of Karim Consulting, Adiwarman Karim, the current condition of the Islamic banking industry could deteriorate earlier than the conventional banking industry. During the Covid19 pandemic, Islamic banking will face several possible risks. such as non-performing financing risk (NPF), market risk, and liquidity risk. Therefore, this risk will ultimately have an impact on the performance and profitability of Islamic banking. Based on the above background, this study was conducted to determine the financial performance of Bank Muamalat Indonesia in terms of financial ratios that were reported periodically during the Covid19 pandemic. This type of research is a descriptive study with a qualitative approach. The data collection technique used is through the documentation method, namely secondary data collection in the form of quarterly financial reports that have been published on the Bank Muamalat Indonesia website in 2020. The analysis technique used is a descriptive analysis by analyzing banking financial performance ratio data. The results of this study state that the financial performance of Bank Muamalat Indonesia during the Covid 19 the year 2020 pandemic was in a healthy condition from the aspects of capital, quality of earning assets, and liabilities. This is evidenced by the results of the value of the Capital Adequacy Ratio (CAR), Non-Performing Financing (NPF), and Financing to Debt Ratio (FDR) which are always at the standard value of a healthy bank financial performance. Meanwhile, in terms of profitability and operational management, Bank Muamalat Indonesia is in an unsanitary condition. This can be seen from the results of the ratio of Return on Assets (ROA), Operational Costs, and Operating Income (BOPO) which are always at ratios that do not comply with sound financial value standards.