Islamic Banks Research Articles

Analysis of the Influence of Macroeconomic Variables and Internal Bank Performance on the Profitability of Islamic Banking in Indonesia

This study aims to examine and analyze the profitability level of Islamic banking in Indonesia by considering macroeconomic conditions, such as inflation, the BI-Rate, and exchange rates, as well as the internal performance of Islamic banks, including CAR, FDR, and BOPO. The research adopts a quantitative methodology with a time-series data analysis covering five years (2019–2023), comprising 60 samples. Data analysis uses the VECM method and the Granger Causality Test to identify causal relationships between variables. Additionally, the study employs Impulse Response Functions and Variance Decomposition to determine the magnitude of variable impacts. The study results indicate that macroeconomic conditions and internal bank characteristics significantly impact efforts to enhance the profitability of Islamic banking. In the short term, the CAR, BOPO, FDR, and exchange rate variables have an insignificant negative effect. Conversely, inflation exhibits a significant positive relationship, while the BI Rate has an insignificant positive effect on improving Islamic banking profitability. In the long term, the CAR, FDR, and inflation variables negatively influence Islamic banking profitability, whereas BOPO has an insignificant positive impact. On the other hand, the BI Rate and exchange rate variables show a relatively significant positive effect. However, these variables collectively substantially impact the profitability of Islamic banking in Indonesia. Bank Indonesia and other financial authorities can utilize the research findings to design more responsive policies to maintain the profitability of Islamic banking. This study provides empirical evidence that can assist Islamic banks in risk management strategies and financial planning.

Corporate Governance, Bank Stability and Risk-Taking: Differences Between Conventional and Islamic Banks

Corporate Governance, Bank Stability and Risk-Taking: Differences Between Conventional and Islamic Banks

Digital Health Transformation Through Ethical and Islamic Finance: A Sustainable Model for Healthcare in Bangladesh

Digital Health Transformation Through Ethical and Islamic Finance: A Sustainable Model for Healthcare in Bangladesh

Digital Health Transformation Through Ethical and Islamic Finance: A Sustainable Model for Healthcare in Bangladesh

This paper presents a comprehensive model for digital health transformation in Bangladesh, leveraging ethical and Islamic finance to create a sustainable and equitable healthcare system. The model integrates advanced digital technologies such as telemedicine, mobile health applications, artificial intelligence (AI), and blockchain to enhance healthcare availability, quality, and effectiveness. By addressing the financial challenges inherent in large-scale healthcare reforms, the model utilizes Islamic finance instruments—Takaful, Zakat, Sadaqah, Waqf, and Sukuk bonds—to ensure financial sustainability while adhering to Shariah principles. The primary goals include improving healthcare quality, reducing costs, increasing financial accessibility, and promoting universal healthcare coverage. The governance structure incorporates a Public-Private Partnership (PPP) model and a Shariah Advisory Council to ensure compliance with national regulations and Islamic principles. Key findings indicate that telemedicine can increase healthcare access by up to 35% in rural areas, AI diagnostics can reduce diagnostic errors by 15%, and the utilization of Zakat and Waqf can inject approximately USD 240 million annually into the healthcare sector. Financial sustainability is further supported by issuing Sukuk bonds, which are papered to raise USD 50 million over five years. The paper also identifies potential challenges, including regulatory compliance, financial risks, cybersecurity threats, and cultural sensitivities in implementing Islamic finance. Mitigation strategies involve policy advocacy, diversified funding sources, robust IT infrastructure, and community engagement. The proposed model offers a transformative approach to healthcare in Bangladesh, aligning with cultural and religious values while addressing critical issues of accessibility, affordability, and quality. This model provides a replicable framework for other developing nations seeking to enhance their healthcare systems sustainably.

The Impact of Artificial Intelligence (AI) Implementation on Islamic Financial Literacy and Global Economic Changes in the Banking World

Currently, the banking sector is facing a transformation towards the digital era in response to the development of fintech and the digital technology revolution. This transformation has brought banks into the era of digital banking services that aim to spread financial inclusion and provide access to the community without time and place constraints. Advances in information and communication technology have brought changes to various industries, including the Islamic finance sector. The development of artificial intelligence (AI) is crucial in the digitalization of Islamic money and offers opportunities to increase efficiency, personalize services, and reduce risks. This study aims to analyze the impact of AI implementation on financial literacy and global economic changes in the banking world by emphasizing effectiveness, efficiency, and compliance with Sharia principles. The research method used is qualitative literature research. Data comes from various sources, including relevant research papers, journals, and books. The findings of this study indicate that the application of AI in Islamic finance can improve operational efficiency, make financial services more accessible, and enable data analysis in a way that facilitates the development of strategic plans. However, the most important thing is to ensure that AI development complies with Sharia principles, including identifying riba, gharar, and non-halal transactions. The findings of this study highlight the importance of clear regulations to support the use of AI in Islamic finance, even if it is based on Islamic law. Through careful and innovative thinking, AI can serve as a strategic tool to enhance the Islamic banking sector in Indonesia, promote financial inclusion, and foster the country's economic growth.

Investigating the Factors Influencing the Acceptance of Islamic Mobile Banking Services

The adoption of Islamic Mobile Banking (IMB) services remains a challenge in Pakistan, despite the increasing global growth of Islamic banking. Shariah compliance, security concerns, and trust issues significantly impact the acceptance of IMB services. This study integrates the Unified Theory of Acceptance and Use of Technology (UTAUT) with Islamic compliance to explore key factors influencing consumer adoption. Previous research suggests that regulatory confidence and performance expectancy play a pivotal role in technology acceptance (Venkatesh et al., 2012; Nasri, 2021; Hassan & Lewis, 2020). However, in the context of Islamic banking, additional variables such as financial security, awareness, and government regulations significantly shape user perceptions and adoption decisions (Mensah & Khan, 2024; Yusfiarto et al., 2024). A quantitative research methodology was employed, utilizing a structured survey to collect primary data from 400–500 respondents in Pakistan. The study applied Partial Least Squares Structural Equation Modeling (PLS-SEM) and SPSS for data analysis, ensuring validity and reliability (Hair et al., 2019). The results indicate that Government Regulation (GR) (β = 3.51, p < 0.01) and Performance Expectancy (PE) (β = 1.74, p < 0.05) are the strongest predictors of IMB adoption. Interestingly, Awareness (AWN) showed a negative impact (-3.20, p < 0.01), suggesting that consumer skepticism toward Shariah compliance and security may hinder adoption (Khan et al., 2023; Zouari & Abdelhedi, 2021). The findings highlight the critical role of regulatory transparency, perceived usefulness, and trust-building measures in driving IMB adoption. The study suggests that mere awareness campaigns are insufficient; rather, efforts should focus on strengthening Shariah governance, financial literacy, and cybersecurity measures to enhance user confidence (Ali & Hassan, 2022; Windasari et al., 2022). Future research should explore trust, risk perception, and ethical banking concerns as moderating factors influencing IMB adoption. Policymakers and financial institutions must adopt a holistic approach, ensuring that Islamic banking services align with consumer expectations while maintaining regulatory compliance. Expectancy (PE) (β = 1.74, p < 0.05) are the strongest predictors of IMB adoption. Interestingly, Awareness (AWN) showed a negative impact (-3.20, p < 0.01), suggesting that consumer skepticism toward Shariah compliance and security may hinder adoption (Khan et al., 2023; Zouari & Abdelhedi, 2021). The findings highlight the critical role of regulatory transparency, perceived usefulness, and trust-building measures in driving IMB adoption. The study suggests that mere awareness campaigns are insufficient; rather, efforts should focus on strengthening Shariah governance, financial literacy, and cybersecurity measures to enhance user confidence (Ali & Hassan, 2022; Windasari et al., 2022). Future research should explore trust, risk perception, and ethical banking concerns as moderating factors influencing IMB adoption. Policymakers and financial institutions must adopt a holistic approach, ensuring that Islamic banking services align with consumer expectations while maintaining regulatory compliance.

Faktor Intrinsik yang Berperan pada Motivasi Kerja dari Perspektif Teori Dua Faktor pada CO BTPNS

Work motivation is crucial in enhancing employee performance and productivity, especially in the Islamic banking sector. This study analyzes intrinsic factors influencing the work motivation of Community Officers at Bank BTPN Syariah MMS Rantau Rasau based on Herzberg’s Two-Factor Theory. Using a descriptive qualitative approach, data was collected through interviews, observations, and document analysis. The findings reveal that intrinsic factors contributing to motivation include achievement, recognition, responsibility, the nature of the work, and career development opportunities. Among these, achievement and recognition are the most dominant factors influencing work motivation. Community Officers who receive appreciation for their achievements and recognition from superiors and colleagues tend to demonstrate higher morale and commitment. Therefore, this study recommends that Bank BTPN Syariah emphasize achievement and recognition in human resource management policies. Providing rewards for accomplishments and constructive feedback can enhance employee motivation and performance, ultimately supporting organizational goals.

Corporate social responsibility disclosure and dividend policy of Islamic banks: evidence from GCC countries

Purpose The purpose of this study is to investigate the relationship between corporate social responsibility (CSR) disclosure and dividend policy of Islamic banks. Design/methodology/approach Annual reports from 29 Islamic banks in the GCC region are analyzed over the period 2010–2019. A CSR index was constructed to measure the extent of CSR disclosure. Findings The findings of this study indicate that CSR disclosure negatively impacts the dividend payout ratio (DPR) but boosts the likelihood of paying dividends. The mission and vision (MV) CSR sub-dimension reduces payouts, while zakah, charity and community commitment (ZCB and CTC) enhance dividend propensity. Results are robust across measures. Originality/value This research provides new insights into the interplay between CSR practices and dividend policies in Islamic banks, highlighting specific CSR dimensions that influence financial decisions.

Financing-Limit Prediction Classifier in Islamic Bank Using Tree-Based Algorithms

Islamic banks are one of the financial institutions that has been proven to be the catalyst to end extreme poverty in the world. However, amid the massive development of Industry 5.0, research about technology adaptation in Islamic banks is still considered rare. The aim of this study is to develop a technology that will help Islamic banks in making their financing decision more efficient. By using the current outstanding financing data in an Islamic bank, this study proposes a machine learning algorithm that could predict a financing limit based on customer classification. The tree-based learning algorithms used to build the algorithm have shown impressive results. The results show that the basic algorithm which is the Decision Tree gives 86% prediction accuracy. The algorithm is then improved by using the Random Forest algorithm. The Random Forest algorithm gives 91% prediction accuracy which significantly improves the base learning algorithm. Future research in this area is needed as the need to implement sophisticated technology is prominent in making Islamic banking more accessible across the globe.

Competencies of Shariah Auditors: Skills, Knowledge, and Challenges in Islamic Banking Practice

This study explore the competencies of Shariah auditors, which include technical skills (hard skills) such as understanding Shariah accounting standards and fiqh muamalah principles, as well as interpersonal skills (soft skills) such as communication, integrity, and objectivity. Using the literature review method, data was collected from recent journals and scientific reports. The results showed that these competencies are essential for ensure compliance with Shariah principles, manage risk, and enhance accountability in Islamic financial institutions. One of the main challenges faced is the lack of certified auditors and the need for continuous training. This research emphasizes the importance of competency development to support the sustainability of the Islamic banking industry.

Financial Distress on Islamic Banks in Indonesia Impact of Covid 19 Pandemic and Economic Recession

Financial Distress on Islamic Banks in Indonesia Impact of Covid 19 Pandemic and Economic Recession

Fiqh al-Mu’āmalāt in Madrasah Aliyah Curriculum: Perspective of Islamic Economics, Entrepreneurship Education, and Islamic Financial Literacy

This study explores the integration of Fiqh al-Mu’āmalāt into the Madrasah Aliyah curriculum through the lens of Islamic economic theory, entrepreneurship education, and Islamic financial literacy. The research aims to assess the effectiveness of the existing curriculum and identify areas for improvement. Data collection methods include questionnaires, interviews, and documentation, analyzed using data reconciliation, presentation, and construction approaches. The primary data source consists of 112 Madrasah Aliyah students from Bali and Jakarta. The findings reveal a discrepancy between students' awareness of the importance of Fiqh al-Mu’āmalāt (78.6% considered it useful) and its practical implementation in the curriculum, particularly in grades XI–XII. Analysis of the Grade X Fiqh textbooks indicates that while the content is comprehensive, it lacks applicability to real-world contexts. These findings suggest the need for curriculum restructuring to ensure the sustainable integration of Fiqh al-Mu’āmalāt. This study contributes to a comprehensive understanding of Fiqh al-Mu’āmalāt instruction by highlighting the relationship between theoretical knowledge and students' economic preparedness. However, its limitations include a restricted geographic scope and a focus on students' perceptions. Future research should incorporate cross-country longitudinal and comparative studies, as well as experimental research on effective Fiqh al-Mu’āmalāt teaching methodologies to enhance students’ practical financial and entrepreneurial competencies

A comparative study of Islamic conformity, profitability, and green performance in Southeast Asian Islamic banks

Southeast Asian countries, as members of the Association of Southeast Asian Nations (ASEAN), hold the second-largest Sharia financial assets globally. This study aims to assess the comparative performance of Islamic banks across ASEAN, examine the relationship between Islamic conformity, profitability, and green banking practices, and compare performance indicators between Malaysian and Indonesian Islamic banks. The sample includes Islamic banks from Indonesia, Malaysia, Brunei Darussalam, Thailand, and the Philippines. The findings reveal consistent adherence to Sharia principles across all banks, demonstrating strong Islamic conformity. However, financial performance indicators such as Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM) show significant variability, reflecting differences in operational efficiency and profitability. Green banking practices positively correlate with profitability, particularly ROA and NPM, emphasizing the role of Environmental, Social, and Governance (ESG) initiatives in enhancing operational efficiency and customer loyalty. The comparative analysis highlights that while both Malaysian and Indonesian Islamic banks exhibit consistent Islamic conformity, Malaysian banks outperform their Indonesian counterparts in green banking practices and profitability. This advantage is attributed to Malaysia’s advanced regulatory environment, which promotes sustainable finance, whereas Indonesian banks face greater profitability variability, necessitating improved governance and operational strategies. These findings offer valuable insights for policymakers and stakeholders, showcasing how Islamic financial principles can integrate with sustainability practices to achieve profitability and environmental responsibility in Islamic banking. Acknowledgment(s)The authors extend their gratitude to the Ministry of Higher Education, Science and Technology of the Republic of Indonesia for funding this research and to the Research and Community Service Centre of Universitas Mercu Buana for their valuable support.

AI in Islamic finance: Global trends, ethical implications, and bibliometric insights

Purpose – This study explores the integration of Artificial Intelligence (AI) in Islamic finance, analyzing global trends, ethical implications, and future research directions. The purpose is to assess AI’s role in enhancing Sharia compliance, regulatory adherence, and operational efficiency in Islamic financial institutions.Methodology – Using a bibliometric analysis approach, this research examines publications from 2010 to 2023 indexed in Scopus and Web of Science. Keywords such as Islamic finance, "artificial intelligence, AI in finance, Sharia compliance, and globalization guided the search. Analytical tools, including VOSviewer and CiteSpace, were employed to visualize publication trends, citation networks, and influential research contributions from key countries like Pakistan, Malaysia, Turkey, Saudi Arabia, Indonesia, Qatar, Iran, and the UAE.Findings – The research indicate that AI significantly enhances financial inclusion, risk assessment, compliance automation, and customer service in Islamic finance. Key research areas highlight AI-driven solutions for Sharia-compliant financial products, ethical considerations, and regulatory frameworks. However, limitations exist, as this study focuses only on English-language publications, potentially omitting critical insights from non-English sources.Implications – This research contributes to the understanding of AI's role in Islamic finance, offering practical implications for financial institutions seeking to integrate AI for efficiency, transparency, and compliance. Originality – It provides an original bibliometric perspective on AI applications in Islamic finance, underscoring the sector’s potential for innovation and sustainable growth in a globalized financial landscape.

Advancing Knowledge in Islamic Banking and Finance: A Meta-Analysis of Literature Trends and Gaps

This systematic literature review provides an in-depth exploration of the realm of Islamic banking and finance, with a focused emphasis on Scopus-indexed research articles. Employing the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) methodology, our investigation methodically navigated the extensive database to meticulously curate a final selection of 202 published articles composed in the English language. Through exacting screening processes and innovative data visualization techniques facilitated by VOSviewer, this systematic review aspired to delineate and showcase the thematic evolution within the literature of Islamic banking and finance. The study sought to identify and visualize the interconnectedness among research themes, collaboration networks among authors, institutions, and countries. Beyond highlighting thematic trends and collaborative networks, the analysis aimed to elucidate the most influential contributions that significantly shape the academic landscape of Islamic banking and finance. Consequently, the outcomes of this comprehensive analysis contribute significantly to a nuanced understanding of the intellectual foundations, key research trends, and future prospects within Islamic banking and finance research. This study stands as a valuable resource for scholars, practitioners, and policymakers alike who are keenly interested in the dynamic and evolving field of Islamic banking and finance.

Contribution of Islamic economy in achieving Sustainable Development Goals (SDGs)

Purpose – This study aims to analyze the contribution of Islamic economics using various instruments to the achievement of Sustainable Development Goals (SDGs).Methodology – This study uses a qualitative approach with a literature study approach, with reference to various studies.Findings – This study found a close correlation and relevance between maqashid sharia as a goal of Islamic economics and the goals stated in the SDGs. In addition, it is concluded that the balance between commercial and social aspects in the Islamic economy is significant in sustainable development, which is manifested as a real contribution to the realization of the SDGs through the Islamic finance and banking sectors, as well as the Islamic social finance sector.Implications – It is recommended that the government optimize the management of various Sharia economic instruments to accelerate the achievement of the SDGs. Originality – This study emphasizes the suitability of the aim of the Islamic economic system to realize the achievement of the main maqashid sharia, namely maslahat, with the goals stated in the SDGs. It explores the contribution of the Islamic economic system in realizing sustainable development.

Integration between Islamic financial technology and Islamic financial principal to improve performance of SMEs in Indonesia

This study investigates the integration of Islamic financial technology and principles and their impact on small and medium enterprise (SME) performance in Indonesia. Utilizing a quantitative research methodology, the study employs a correlational design to examine the relationships between Islamic financial technology adoption, adherence to Islamic financial principles, and SME performance metrics. The research sample comprises 230 Muslim SME owners from Java Island, selected through stratified random sampling. Data collection involved structured questionnaires designed to measure the adoption levels of Islamic financial technology, adherence to Islamic financial principles, and various indicators of SME performance. The study employed multiple regression analysis to assess the relationships between the variables. Results indicate statistically significant positive correlations between the implementation of Islamic financial technology, adherence to Islamic financial principles, and SME performance. The regression model accounts for 79.5% of the variance in SME performance. Islamic financial technology adoption emerged as a particularly strong predictor of improved SME outcomes, suggesting the potential for technological innovation within an Islamic financial framework to drive business success. This research contributes to the growing body of literature on Islamic finance and financial technology in emerging markets. It provides empirical evidence for the potential synergies between Islamic financial principles and modern financial technology in enhancing SME performance in Indonesia. The findings have implications for policymakers, financial institutions, and SME owners in leveraging Islamic financial technology to promote sustainable economic growth.

DETERMINING INTEREST AND USE OF FINTECH IN SYARIAH BANKS IN INDONESIA (CASE STUDY ON SYARIAH BANK INDONESIA (BSI))

The purpose of this study is to look at the determining factors of mobile banking usage in Islamic banks in Indonesia, especially at Bank Syariah Indonesia. The method used in this study is a factor analysis study, namely the EFA (Exploratory Factor Analysis) technique. The data comes from active customers who use Bank Syariah Indonesia mobile banking throughout Indonesia. The findings of the study suggest that Based on the research results, it can be concluded that there are two new factors formed in the factors that determine the interest and use of mobile banking in Fintech at Bank Syaraiah in Indonesia (case study at BSI). These factors are the Main Factors and Supporting Factors. This research is hoped to have implications for the use of mobile banking by Islamic banks in Indonesia and it can be a guideline for Islamic banks in improving the quality of their technology. To the best of the authors' knowledge, this is the first research related to the use of mobile banking in Indonesia using EFA (Exploratory Factor Analysis).

Evaluating Asymmetric Impacts of Islamic Bank Financing on Employment In Indonesia

Research Originality: This research examines the asymmetric impact of Islamic bank financing on employment in IndonesiaResearch Objectives:. This research aims to test the nolinear impact (gn) of Islamic bank financing on employment in IndonesiaResearch Methods: This research utilizes secondary data from 2006 to 2022 and employs non-linear ARDL (Auto Regressive Distributive Lag) and Conditional ECM (Error Correction Model) analysis methodsEmpirical Results: In the short term, increases in Islamic bank financing significantly boost labor force participation (LFPR), while decreases have no significant effects. Long-term analysis shows positive changes continue to enhance LFPR, but negative changes do not impact GDP. The impact of financing on LFPR is symmetrical over time, indicating short-term asymmetries do not persistImplications: This research implies that the Indonesian government can boost the growth of Islamic bank financing to increase employment opportunities for the population both in the short and long term.JEL Classification: E24, G21,C32How to Cite:Cahyono, E. F., Ngah, W. A. S. W., Law, S. H., Mazlan, N. S., Ahmad, M. N. N., & Mohhamed, A. (2025). Evaluating Asymmetric Impacts of Islamic Bank Financing on Employment in Indonesia. Etikonomi, 24(1), 31 – 52. https://doi.org/10.15408/etk.v24i1.40139.

A closer look at halal brand image: systematic review and future directions

Purpose Halal brands are crucial in driving the growing global Islamic economy. Despite the importance of brand research and the rich brand literature, there has yet to be a comprehensive study of brand image across halal industries. This study aims to systematically review the existing literature on brand image in halal industries to provide a state-of-the-art understanding and identify opportunities in this research area. Design/methodology/approach Guided by the Scientific Procedures and Rationales for Systematic Literature Reviews protocol and the theories, contexts, characteristics and methods framework, this paper reviews 35 journal articles from the Scopus and Web of Science (WoS) databases that feature brand image as an underpinning theory in the context of halal economies. Findings Since the first study almost a decade ago in 2014, brand image research in halal industries has concentrated on consumers in the Islamic finance sector. Keyword co-occurrence analysis reveals that central research themes in halal brand image include outcomes of trust, satisfaction and loyalty. Most studies are focused on halal industries in Muslim countries. The cognitive operationalization of brand image remains dominant in halal industry studies. There is a lack of studies on the moderators of halal brand image. Several unique antecedents of halal brand image are uncovered in this review that are undetected in traditional brand image studies. Research limitations/implications The studies in this review are based on the Scopus and WoS databases, which may be perceived as a study limitation. This paper also only considered English journal articles and studies that focused on brand image in halal industries rather than general industries with Muslim consumers. Practical implications To become a global brand, halal brands must effectively build and communicate their brand image. This review provides managers with an appreciation of brand image across different halal industries and a strategic lens on universal drivers and those that are faith/ethics related. The consequences of an effective halal brand image can inform and motivate managerial decisions with multiple stakeholders in brand-building campaigns. Researchers can use the results of this review to guide future multidisciplinary studies and contribute toward the development of this research field. Originality/value To the best of the author’s knowledge, this paper is the first to comprehensively map the antecedents, dimensions, outcomes and moderators of brand image across halal industries. This study gives managers a strategic understanding of brand image across the halal economy. This review also develops a conceptual model that maps the halal brand image nomological network revealing three key antecedent categories of halal brand image. A research agenda on halal brand image with 18 future research recommendations is introduced to the literature.