Performance Of Islamic Banks Research Articles

Islamic Bank Risk Studies: A Bibliometric Review

This article analyzes Islamic banking risk trends from 1996 to November 2024. This study aims to: (1) trends and growth of publications ‎related to Islamic banking risks; (2) the most productive contribution related to the risk study of Islamic banking; (3) the most cited ‎documents in research related to Islamic banking risks; (4) essential keywords involved in Islamic banking risk research. The processed data ‎were obtained from the Scopus database using the term (Islamic OR sharia*) AND (bank OR finance) AND (risk), resulting in 355 ‎documents, then exported and analyzed using Biblioshiny, VOSviewer, Publish or Perish (PoP), and Microsoft Excel. The results of the ‎study show that most publications occurred in 2023. The authors who contributed the most to publishing documents were Mirakhor, A. (7 ‎publications), International Islamic University Malaysia by the institution (98 publications), English by language (98 percent), Malaysia by ‎country (104 publications), and Journal of Islamic Accounting and Business Research by title (25 publications). The most frequently cited ‎article is the work of Mollah et al. (2017) on "The governance, risk-taking, and performance of Islamic banks." Referring to the results of ‎the network visualization mapping, research on Islamic banking risks is grouped into four main themes, including Performance and Management of Islamic Banks Risk and Finance in Islamic Banking, Governance and Efficiency of Islamic Banks, Risk Management Practices, ‎and Types of Risks in Islamic Banks. This study recommends a systematic literature review related to topics and issues regarding ‎technological innovation and further exploration of the regulatory impact of risk in Islamic banking‎.

Zakat and Islamic Bank Financial Performance: Do Third Party Funds Play an Important Role?

Research Aims: Using third-party money as a moderating variable, the study intends to investigate how zakat affects Indonesian Islamic banking performance Methodology: The research sample consisted of 16 Islamic banks selected using the total sampling method based on the availability of annual financial report data at the financial services authority using smartpls 3.0 and structural equation modeling, the data analysis method was executed. Research Findings: The findings demonstrate that zakat improves Islamic financial performance. This finding supports the theory that optimal zakat fund collection can increase customer trust in Islamic banks. In addition, third party funds strengthen the connection between financial achievement and zakat. This finding is also consistent with the premise that the allocation of third-party finances and funding is positively impacted by optimal zakat and growing public trust. Theoretical Contribution: By enhancing knowledge of the impact of zakat and the function of third-party funds in enhancing the financial performance of Islamic banks, this work makes a substantial theoretical contribution. Research limitation and implication: This study is limited to the sample and use of secondary data, which needs to be considered in interpreting the research findings. The implications of this study are useful for Islamic banks and further researchers to create more thorough research and more efficient tactics.

Lack of Understanding of Shariah Economics to Improve Shariah Bank Performance

This study examines the impact of the lack of understanding of Islamic economics on the performance of Islamic banks. The main problem identified is that although interest in Islamic banking continues to increase, the level of understanding of the public and even some practitioners regarding the principles of Islamic economics is still relatively low. This condition has the potential to hinder the growth and effectiveness of Islamic bank operations. This study aims to analyze in depth how this lack of understanding affects various aspects of Islamic bank performance, including fund raising, financing distribution, customer loyalty, and institutional reputation. The research approach used is a qualitative method with case studies of several Islamic banks in Indonesia. Data were collected through in-depth interviews with bank management, employees, customers, and Islamic economics experts, as well as through analysis of internal documents and financial reports. The results of the study indicate that the lack of understanding of Islamic economics is negatively correlated with the performance of Islamic banks. This can be seen from the low interest of potential customers, difficulties in developing innovative products that are in accordance with Islamic law, high levels of complaints due to misunderstanding of contracts, and lack of trust from some of the community. The implications of this study highlight the urgency of massive and sustainable improvement of Islamic economic education and literacy, both for internal Islamic banks and the general public. Recommendations put forward include the development of a comprehensive Islamic education curriculum, ongoing training programs for bank employees, and effective socialization campaigns to improve public understanding. Thus, it is expected that the performance of Islamic banks can improve along with a better understanding of Islamic economic principles.

Banking security and performance of islamic banks in middle east: the role of regulatory quality

<p>Transaction security is critical for the reputation and trust of banks. Few studies examined how transaction security can impact the financial performance of Islamic banks in developing countries with mixed results emerging in the literature. The research examines how transaction security affects bank financial performance. Three indicators are used to measure the financial performance and includes return on assets (ROA), return on equity (ROE), and Tobin’s Q. Regulatory quality are proposed as a moderating variable. Data was collected from 59 banks in MENA between 2015 and 2022. The results showed that transaction security affected positively ROE and Tobin’s Q. However, there is no significant effect on ROA. Regulatory quality moderated only the effect of transaction security on ROE and Tobin’s Q. Enhance the transaction security and improving the regulatory quality will enhance the financial performance of banks in MENA.</p>

Impact of Green Finance and ESG on the Sustainable Performance of Islamic Banks

Purpose: This Systematic Literature Review (SLR) critically explores the intersection of green finance, ESG frameworks, and sustainable performance within Islamic banking. It interrogates the compatibility of Islamic finance principles with evolving global sustainability agendas, focusing on ethical alignment and value-based financial transformation. Design/Methodology/Approach: The review synthesizes insights from over 80 peer-reviewed articles published between 2015 and 2025. Using bibliometric and thematic analysis—supported by VOSviewer—the study maps co-authorship networks, citation clusters, and emerging thematic trends. It emphasizes instruments such as green sukuk, waqf-linked investments, and Shariah-compliant ESG governance mechanisms. Findings: Results indicate a growing convergence between ESG principles and Islamic financial ethics, especially in Malaysia, Indonesia, and the MENA region. However, the literature exposes fragmentation in ESG reporting standards, lack of robust environmental metrics, and limited digital infrastructure. Integration of Islamic social finance into ESG frameworks remains insufficient. Implications/Originality/Value: This review offers a multidimensional synthesis bridging normative Islamic ethics with practical ESG applications. It calls for contextualized ESG-Shariah frameworks, rigorous empirical assessments of impact, and cross-border regulatory harmonization to empower Islamic banks as pivotal actors in the global ethical finance and climate resilience movement.

RASIO PROFITABILITAS, MANAJEMEN RISIKO DAN MANAJEMEN MODAL KERJA PADA SEKTOR PERBANKAN SYARIAH DAN KONVENSIONAL

Introduction: This study examines profitability ratios, risk management, and working capital management in Islamic and conventional banking sectors. Using a comparative approach, the analysis focuses on financial performance indicators such as Return on Equity (ROE), Non-Performing Financing (NPF)/Non-Performing Loan (NPL), and Current Ratio to identify differences and similarities between the two banking models. The Mann-Whitney U Test is applied to assess whether there are significant differences in these financial ratios between Islamic and conventional banks.Methods: The findings indicate that profitability ratios, risk management strategies, and working capital management differ significantly between the two banking sectors. Islamic banks have a unique financial structure due to Sharia compliance, which influences risk and capital management, including maintaining a more controlled NPF level. Meanwhile, conventional banks rely on interest-based financial mechanisms, shaping their profitability and liquidity strategies differently, including NPL and Current Ratio management to ensure financial stability.Results: The results of this study contribute to a deeper understanding of the financial performance of Islamic and conventional banks. These insights can serve as a guide for policymakers, investors, and banking institutions in making more strategic decisions regarding operations, risk mitigation, and financial planning. Keyword: Profitability Ratio, Risk Management, Working Capital Management, Return on Equity (ROE), Non-Performing Financing (NPF/NPL), Current Ratio (CR

The aggregate contribution of Islamic finance to the financial markets: evidence from Borsa Istanbul

Purpose This study aims to comprehensively evaluate the performance of the Shariah-compliant companies and Islamic bank(s) traded in the Borsa Istanbul. First, it presents a portfolio performance analysis of stocks listed in the Borsa Istanbul Sharia Index and then measures the stock performance of Islamic bank(s) traded in the Borsa Istanbul. Through this dual focus, the study provides valuable insights into the market dynamics of Islamic-sensitive investments. Design/methodology/approach Two data sets were required for the study’s dual aims. The first data set includes the daily returns of all stocks traded between November 2021 and November 2023. Sharia-compliant companies are treated as a portfolio, while others are treated as a separate alternative portfolio, enabling comparative analysis of the performance of these two portfolios. The second data set consists of daily stock returns of all banks from January 2008 to November 2023. A portfolio comprising these banks is created to examine the marginal contribution of each bank to the overall portfolio performance. The total efficiency loss (TEL) model is applied throughout the study to assess portfolio efficiency, providing a comprehensive evaluation of performance relative to a benchmark. Findings The analyses show that the performance of the portfolio constructed with Sharia-compliant companies is inferior to that of the portfolio of other stocks. Furthermore, the findings suggest a potential mismatch between the preferences of Islamic-sensitive investors and the performance of the Sharia-compliant portfolio. This discrepancy highlights the importance of better aligning financial products with investor preferences, particularly for Shariah-compliant investments. Additionally, the analysis of Islamic bank(s)’ performance underscores the need for a more nuanced understanding of Islamic-sensitive investors’ behavior in portfolio management. Originality/value This paper offers a comprehensive analysis of the implications of Islamic finance in the Borsa Istanbul, evaluating the performance of the Sharia-compliant portfolio and Islamic bank(s) using the TEL model. The study extends beyond traditional performance metrics, capturing aggregate value relative to a benchmark and providing new perspectives on how Islamic finance products can be tailored to investor needs. The novel application of the TEL model offers a deeper insight into portfolio performance, particularly in markets with dual banking systems.

Islamic banking performance: the interplay of governance, Islamicity performance, and social disclosure

Purpose – This study investigates the influence of Islamic corporate governance (ICG) and the Islamicity performance index (IPI), as proxied by the profit-sharing ratio (PSR), zakat performance ratio (ZPR), and equitable distribution ratio (EDR), on the financial performance of Islamic banks in Indonesia. Furthermore, this study examines the moderating role of Islamic social reporting (ISR) in these relationships. Method – Employing a quantitative approach, this research utilizes secondary data obtained from the Financial Services Authority (FSA) of Indonesia and the official websites of Islamic banks. The sample comprises 10 Islamic commercial banks operating in Indonesia from 2019–2023. The study applies moderated regression analysis (MRA) to assess the proposed relationships. Findings – The findings reveal that, individually, both ICG and EDR positively and significantly influence financial performance, whereas PSR does not exhibit a significant effect. In contrast, ZPR demonstrates a negative and significant impact on financial performance. Moreover, ISR moderates the relationships between ICG, ZPR, and EDR with financial performance, while its moderating effect is not observed in the relationship between PSR and financial performance. ISR strengthens the impact of ICG and the IPI on Islamic banks' financial performance, enhancing the understanding of governance and performance in Islamic finance. Implications – The theoretical implication highlights ISR's role in enhancing ICG and IPI's impact, and the practical implication emphasizes its importance in boosting transparency and trust in Islamic banking.

The Role of Applying Shariah Governance in Improving the Financial Performance of Islamic Banks - A Survey Study of the Opinions of a Sample of Employees in Islamic Bank Administrations and Auditors in The Kurdistan Region – Iraq

The research aims to demonstrate the role of applying Shariah governance in improving the financial performance of Islamic banks. The importance of the research highlights the importance of applying Shariah governance as a basis for ensuring transparency and protecting the interests of stakeholders in Islamic banks. To achieve the research objective, the researchers relied on primary sources, namely the design of the questionnaire, which was designed based on previous studies and the theoretical aspect of the research. The questionnaire consists of two parts. The first part includes paragraphs aimed at identifying the characteristics of the research sample, and the second part includes (22) paragraphs that were used to collect data in order to test hypotheses and answer questions related to the research problem. The research sample members amounted to (49) individuals, including (24) employees in Islamic bank departments, (15) auditors, and (10) Chatered accountants in audit offices and companies. After analyzing the data using the statistical program (SPSS) and testing the research hypotheses, a set of results was reached, the most important of which are: A positive correlation was found between the independent variable Shariah governance through the dimension (Shariah Financial Services Board and Shariah Supervisory Boards) and the dependent variable financial performance, and the value of the correlation coefficient between them was (.639**), (.678**) respectively. This means that the application of Shariah governance leads to improving the financial performance in Islamic banks. In light of the research results, the researchers recommend a number of recommendations, the most important of which are: the necessity for Islamic banks to adopt the principles of Shariah governance and its approved standards, which enable them to manage the process of financial innovation.

Are Islamic Banks Resilient to Crises: New Evidence from the COVID-19 Pandemic Case of North African Countries

Islamic finance has gained increasing global investor attention, marked by a rise in assets in 2019. Despite market volatility from the COVID-19 outbreak, interest continues to grow, driven by its expansion into new geographic markets and digital transformation, which has enhanced accessibility to Islamic financial products. Hence, the purpose of this study is to explore the impacts of primary macroeconomic variables including GDP growth rates, national debt levels, consumer price fluctuations, lending rate shifts, foreign capital inflows, and external account balances on the performance of Islamic banks, measured by return on assets and return on equity. By applying the fixed-effects panel estimations, the study examines Northeast African countries, Algeria, Morocco, and Tunisia, over the period 2017–2022, taking into consideration the instability introduced by the pandemic. The findings indicate that most of these variables align positively with Islamic bank profitability, while large external financing inflows and chronic balance-of-payments shortfalls tend to depress returns, the study concluded an overreliance on outside funding. The study suggests that policymakers should consider targeted fiscal and monetary support measures and channel international investment through Islamic banking institutions to sustain and enhance their profitability.

The impact of the characteristics of Sharia committee on Islamic bank performance: evidence from the Gulf Cooperation Council

PurposeThis study investigates the influence of governance mechanisms—specifically, the characteristics of the Shari’ah supervisory board—on the financial performance of Islamic banks (IBs) in Gulf Cooperation Council (GCC) countries. Specifically, it examines the role of board independence, the competence of the Shari’ah committee members, gender diversity and the size of the Shari’ah committee in shaping the performance of IBs.Design/methodology/approachUsing a manually collected dataset covering 14 IBs across six GCC countries from 2012 to 2022, this study analyzes 154 firm-year observations.FindingsThe findings suggest that Shari’ah governance factors significantly affect the financial performance of IBs. The results indicate that Shari’ah board independence, Shari’ah committee members’ competence, gender diversity and Shari’ah committee size positively influence IBs’ performance. These findings contribute to the ongoing debate on corporate governance in IBs and provide practical implications for policymakers and bank executives.Originality/valueTo the best of the authors’ knowledge, this is among the first empirical attempts at examining the extent to which Islamic governance mechanisms may drive corporate performance. However, this study boldly shifts the focus to the independence and competence of the SSB, the frequency of meetings and the critical dimension of gender diversity. By addressing these factors, it makes a significant and timely contribution to the literature on Islamic banking in the GCC region, underscoring the importance of robust governance structures in fostering trust and performance in financial institutions.

Analysis of the Performance of Islamic Commercial Banks in Indonesia in 2021-2023

Background: The Islamic banking sector in Indonesia has seen rapid growth. To support this expansion, performance measurement methods adhering to Shariah principles are essential.Objectives: This study evaluates the performance of Islamic Commercial Banks (ICBs) in Indonesia using the Maqashid Syariah Index (MSI) and the Islamicity Performance Index (IPI).Novelty: Unlike previous studies, this research addresses gaps in prior findings and reexamines the alignment of Islamic banking practices with Shariah principles.Research Methodology / Design: A purposive sampling technique was employed to select 10 ICBs. The study adopts a quantitative approach using secondary data from financial reports and applies descriptive analysis to assess bank performance.Findings: The results reveal that many ICBs in Indonesia do not fully align with MSI or IPI metrics, indicating inconsistencies in achieving Shariah objectives.Implication: Further research with expanded sample sizes and refined methodologies is essential. Islamic banks must enhance the transparency and comprehensiveness of financial disclosures to better reflect Shariah compliance. Additionally, theoretical advancements are required to bridge gaps in current performance measurement frameworks.

Dampak Inovasi Internet Banking (E-Banking) Terhadap Kinerja Bank Umum Syariah Di Indonesia

One of the non-cash transactions implemented in Islamic Commercial Banks in Indonesia is internet banking (e-banking) services. This study aims to determine the impact of Internet Banking (E-Banking) innovation on the financial performance of Islamic Commercial Banks in Indonesia. The population of this study consists of all Islamic Commercial Banks in Indonesia in 2013 to 2023. According to the Financial Services Authority's Islamic Banking Statistics Data in 2013, there were 11 Islamic commercial banks in Indonesia. As a result of the merger of several Islamic banks, this study obtained data from 6 Islamic commercial banks as samples. The results of the study indicate that the Implementation of Internet Banking (IB) has a negative effect on Return on Assets (ROA). This is thought to be due to costs associated with internet banking services, such as infrastructure, maintenance, and human resources, which require higher expenditures compared to the income generated from the internet banking service itself. In addition, the increasing frequency of internet banking service updates has the potential to reduce bank profitability (ROA) due to the high costs associated with device updates, which in turn reduce income. Overall, the costs paid by Islamic banks to provide internet banking services involve various components of quite large costs, ranging from system development and maintenance to transaction costs, security, and sharia compliance. SIZE, DEPOSIT, NPF and BOPO affect the performance of Islamic commercial banks in Indonesia. The empirical findings of this study have significance for the development of e-banking which will bring long-term benefits to the entire banking industry in Indonesia.

Comparative study on financial performance of Islamic banks and conventional banks before and after COVID-19: Evidence from Indonesia

The COVID-19 pandemic has affected bank lending growth to the point of decreasing banking profitability. Therefore, this study aims to analyze the differences in the performance of conventional banks and Islamic banks before and after the COVID-19 pandemic in Indonesia. This study uses secondary data with a quantitative approach. The performance is measured using four financial ratios: CAR, ROA, LDR or FDR, and BOPO. The population in this study is conventional banking and Islamic banking in Indonesia. The observation period for this study starts from pre-COVID-19 in June 2016 to March 2019 and post-COVID-19 from March 2020 to June 2023. The hypotheses were tested using the paired T-test and the one-sample Kolmogorov-Smirnov test for normally distributed data. The results of the one-sample Kolmogorov-Smirnov test on conventional banks show that whether there is a distinction between the performance of conventional banks and Islamic banks before and after the COVID-19 pandemic in Indonesia. The results of the graphic investigation indicate that there are financial ratios that have experienced an increase in performance, to be specific the CAR, ROA, and BOPO proportions, whereas the FDR or LDR tend to encounter a decrease in performance after COVID-19. There was an increase and decrease between before and after the outbreak of the COVID-19 pandemic in each proportion, which is still in the category with healthy and good banking qualification. AcknowledgmentThe substantial financial support for this study through the HIT funding scheme, provided by the Research and Innovation Institute (LRI) of Universitas Muhammadiyah Surakarta, is greatly appreciated by the authors.

Performance of Islamic Banks During the COVID-19 Pandemic: An Empirical Analysis and Comparison with Conventional Banking

This study examines the performance and resilience of Islamic banks during the COVID-19 pandemic, a period marked by unprecedented global economic disruption. Drawing on empirical data and a comparative analysis with conventional banking institutions, the research evaluates key financial indicators—liquidity, profitability, asset quality, and capital adequacy—to assess how Islamic banks responded to the crisis. The unique principles of Islamic finance, including risk-sharing, asset-backed financing, and the prohibition of interest and speculative activities, provide a distinct framework for crisis response. By analyzing how these features influenced bank performance during the pandemic, the study offers valuable insights into the relative robustness of Islamic versus conventional banking models. The findings contribute to the academic discourse on financial stability and risk management, offering practical implications for policymakers, regulators, and stakeholders to strengthen financial systems against future global shocks.

DEVELOPING ISLAMIC BANKING PERFORMANCE MEASURES BASED ON MAQASID AL-SHARI’AH FRAMEWORK: CASES OF 24 SELECTED BANKS

Islamic banking has achieved remarkable growth that has surpassed the growth of the conventional banking system. Yet, studies show that the performances of Islamic banks (IBs) seem to be trailing behind the conventional banks (CBs). Is the poor performance of IBs the result of mismatch between their objectives and their performance measurement criteria or it is a reflection of their true performances? The objectives of Islamic banking had not been formally addressed. Mustafa and Taib (2009) derived the objectives of Islamic banking from Abu Zahara’s theory of the objectives of Shari’ah (Maqasid al-Shari’ah) and, based on these Shari’ah objectives, developed a model of Islamic banking performance measures. They named it as Performance Measures based on Maqasid al-Shari’ah framework or the PMMS model. This paper has tested the PMMS model on a sample 24 banks (12 IBs and 12 CBs). The twenty four banks were also evaluated using the traditional conventional financial measures. Mann-Whitney U-Test results show IBs faring well in their performances when measured using the PMMS model than when they are measured using the conventional banking performance yardstick. Policy prescriptions and recommendations for further studies are provided at the concluding section of the paper.

Repositioning Islamic social reporting as a strategic moderator: Evidence from Indonesian Islamic banks

This study aims to assess the effect of Islamic Social Reporting (ISR) on the relationship between financial performance and firm value in Indonesian Islamic banks. This study utilizes the Moderated Regression Analysis model, with ISR serving as the moderating variable, financial performance metrics (Financing to Deposit Ratio [FDR], Return on Assets [ROA], and Capital Adequacy Ratio [CAR]) as the independent variables, and firm value (EVA) as the dependent variable. The study focuses on ten Islamic commercial banks in Indonesia from 2017 to 2023 and is based on the analysis of 70 annual financial reports, utilizing Moderated Regression Analysis. The findings indicate that ISR significantly moderates and strengthens the relationship between ROA and EVA. This underscores the critical role of ISR reporting in helping regulators develop a more comprehensive framework and in reinforcing the industry’s adherence to Islamic economic principles. By exploring the nuanced role of ISR in amplifying financial signals like ROA, this study subtly repositions ISR from a mere reporting obligation to a strategic element that deepens the value relevance of Islamic financial disclosures.

COMPARATIVE ANALYSIS OF FINANSIAL PERFORMANCE IN ISLAMIC BANKS: A CASE STUDY OF INDONESIA AND MALAYSIA USING SHARIA CONFORMITY AND PROFITABILITY (2018 – 2024)

Research aims: This study aims to compare the financial performance of Islamic commercial banks in Indonesia and Malaysia using the Sharia Conformity and Profitability (SCnP) framework, focusing on their alignment with sharia principles and profitability levels. Design/Methodology/Approach: A quantitative descriptive method was used, with secondary data obtained from Islamic bank financial reports and official sources such as OJK, IFSB, and PSIFIs. The SCnP model served as the primary analytical tool, and all Islamic commercial banks in both countries were included using saturated sampling. Research findings: Islamic banks in Indonesia showed fluctuating yet improving financial performance, particularly in profitability, reaching optimal position in 2024. However, challenges remain in maintaining consistent sharia compliance. Malaysian Islamic banks, meanwhile, consistently occupied the upper-left quadrant (ULQ), indicating strong profitability but limited use of profit-sharing instruments. Theoretical Contribution/Originality: This study contributes to the literature by applying the SCnP model in a cross-country comparison, highlighting the influence of regulatory systems and governance on Islamic banking performance. Practitioners/Policy Implications: Findings suggest that Indonesian banks should improve governance and investment screening, while Malaysian banks may benefit from enhancing the adoption of profit-sharing contracts to align more closely with Islamic ethical objectives. Research Limitations/Implications:The study is limited to quantitative data and excludes qualitative aspects such as governance and customer perception. Future research is encouraged to integrate these dimensions for a more comprehensive evaluation.

ANALYSIS OF THE APPLICATION OF THE CAMELS METHOD TO MEASURE THE LEVEL OF HEALTH AT BANK MEGA SYARIAH FOR PERIOD 2019-2023

Research aims: This study aims to assess the financial health of Bank Mega Syariah during the 2019–2023 period using the CAMELS framework, to determine its performance stability and risk exposure. Design/Methodology/Approach: This research employs a quantitative descriptive approach based on secondary data extracted from the annual financial reports of Bank Mega Syariah (2019–2023). The analysis is conducted using the CAMELS method, which evaluates six key aspects: Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk. The performance of Bank Mega Syariah is ranked relative to other Islamic banks operating in Indonesia. Research findings: The results show that Bank Mega Syariah consistently maintained a sound financial position throughout the five-year period. The bank ranked first in key indicators such as Capital Adequacy Ratio (CAR), Non-Performing Financing (NPF), Operational Efficiency Ratio (BOPO), and Financing to Deposit Ratio (FDR). Additionally, it ranked second in Return on Assets (ROA) and Net Income (NI), and third in Net Operating Income (PDN), though it placed fourth in Return on Equity (ROE). Theoretical Contribution/Originality: This study contributes to the limited body of empirical literature on Islamic bank performance in Indonesia by offering a multi-year evaluation using the comprehensive CAMELS framework. It enhances understanding of Islamic bank resilience and performance indicators under Sharia compliance. Practitioners/Policy Implications: The findings provide useful insights for bank management, investors, and regulators to support strategic decision-making, risk mitigation, and regulatory supervision. They also highlight the importance of maintaining balanced financial ratios to ensure long-term sustainability. Research Limitations/Implications: The analysis is limited to one Islamic bank and relies solely on publicly available financial reports, without incorporating macroeconomic variables or customer perception data. Future research could expand the scope to include comparative studies across multiple Islamic banks or introduce qualitative dimensions.

How Does ROGIC Affect Financial Performance through Intellectual Capital of Modern Sharia Banking registered with the OJK?

Purpose: This study examines the effect of the Intellectual Capital Growth Rate (ROGIC) on the financial performance of Islamic banks in Indonesia, with Intellectual Capital (IC) as a mediating variable. Design/Methodology/Approach: Using a quantitative approach and path analysis, data from seven Islamic banks registered with the OJK for the 2018–2023 period were analyzed to measure the direct and indirect effects of ROGIC on Return on Assets (ROA). Findings: The results showed that ROGIC did not significantly affect ICs in most banks, and its immediate impact was limited. However, in banks such as KB Bukopin Syariah and BTPN Syariah, ROGIC has a significant indirect effect on financial performance through IC. These findings emphasize the importance of effective IC management in improving financial performance. Research limitations/implications: The limitations of the study include a limited sample, so further research with a larger sample and additional variables is recommended. Practical implications: The practical implication is the need for IC optimization by Islamic bank management. This research contributes to the understanding of the relationship between intellectual capital growth and financial performance in the context of Islamic banking. Paper type: Research paper