DETERMINING THE PROFITABILITY OF ISLAMIC BANKS WORLDWIDE: NET PROFIT MARGIN, NON-PERFORMING FINANCING, DEBT-TO-ASSET RATIO, AND THIRD-PARTY FUNDS

Wardana, Guntur Kusuma ORCID: https://orcid.org/0000-0001-7901-1228, Dewi, Annisa Sinta and Barlian, Noer Aisyah DETERMINING THE PROFITABILITY OF ISLAMIC BANKS WORLDWIDE: NET PROFIT MARGIN, NON-PERFORMING FINANCING, DEBT-TO-ASSET RATIO, AND THIRD-PARTY FUNDS. Presented at ICONIES FACULTY OF ECONOMICS UIN MAULANA MALIK IBRAHIM MALANG.

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Abstract

This study examines the determinants of profitability in Islamic banks by analyzing the effects of Net
Profit Margin (NPM), Non-Performing Financing (NPF), Debt-to-Asset Ratio (DAR), and Third-Party
Funds (DPK) on Return on Assets (ROA). Using secondary data from 20 Islamic banks across 12
countries (2019–2023), panel data regression with the Random Effect Model (REM) was employed.
The results show that NPM and DAR significantly affect ROA, while NPF and DPK have no
significant individual impact. However, collectively, these variables significantly influence
profitability, with an Adjusted R-squared of 36.24%. The findings emphasize the need for Islamic
banks to improve efficiency, manage debt structures prudently, and optimize fund allocation to
strengthen global profitability.

Item Type:	Conference (Paper)
Keywords:	Islamic Banking, Profitability, NPM, DAR
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150299 Banking, Finance and Investment not elsewhere classified
Divisions:	Faculty of Economics > Department of Islamic Banking
Depositing User:	Guntur Kusuma Wardana
Date Deposited:	27 Jan 2026 09:00

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