Profitability of Islamic Banks in the World: Solvency, Liquidity and Capital Adequacy Factors with Moderation of Firm Size

Lestari, Renita Diyana, Wardana, Guntur Kusuma ORCID: https://orcid.org/0000-0001-7901-1228 and Yahya, Abdul Hakim (2025) Profitability of Islamic Banks in the World: Solvency, Liquidity and Capital Adequacy Factors with Moderation of Firm Size. Al-Mashrafiyah: Jurnal Ekonomi, Keuangan dan Perbankan Syariah. ISSN 2597-4904

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Abstract

Banks can be said to be able to manage operations well when there is an increase in profit. This research goal is to investigate the effectt of solvency, liquidity, and capital adequacy on profitability, with firm size serving as a mode rating variable. The research focuses on Islamic banks worldwide for the period 2019-2023. A quantitative approach using a causality method was employed. The tudy population is composed of 188 members of the Islamic Financial Services Board, and the sample was selected using purposive
sampling, resulting in 19 Islamic banks. Data analysis was conducted using panel data regression, which blends cross-sectional and time series data. The findings show that, individually, solvency and capital adequacy significantly affect the profitability of Islamic banks globally, while liquidity does not. In contrast, when considered together, solvency, liquidity, and capital adequacy significantly influence profitability. Firm size mode rates the effect of solvency on profitability, but does not mode rate the effects of liquidity and capital adequacy
on the profitability of Islamic banks worldwide. The implications of this
research indicate that Islamic banks need to pay attention to solvency and capital adequacy to increase profitability. Liquidity that does not have a significant effect indicates the need for a more optimal management strategy. In addition, firm size can strengthen the influence of solvency on profitability, so that expansion and growth strategies are important for Islamic banks in increasing their competitiveness.

Item Type:	Journal Article
Keywords:	Profitability, Solvency, Liquidity, Capital Adequacy
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 09:01

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