Asymmetric effects of financing models on Islamic rural bank profitability: The moderating role of socioeconomic factors and credit risk

Maulana, Akbar Surya, Miranti, Titis ORCID: https://orcid.org/0000-0002-8720-3809 and Kornitasari, Yenny ORCID: https://orcid.org/0000-0001-8842-8113 (2026) Asymmetric effects of financing models on Islamic rural bank profitability: The moderating role of socioeconomic factors and credit risk. Maliki Islamic Economics Journal (M-IEC Journal), 6 (1). pp. 1-17. ISSN 2798-0383; E-ISSN: 2797-8125

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Abstract

This study aims to analyse the impact of Profit and Loss Sharing (PLS) and Non-PLS financing on the profitability of Rural Islamic Banks (BPRS) in Indonesia, incorporating Non-Performing Financing (NPF), financial literacy, and the inequality index as moderating variables. A quantitative approach is employed, utilizing panel data from BPRS for the period 2011–2024, which includes 644 observations from 44 BPRS in Indonesia. The analysis is conducted using panel data regression and Moderated Regression Analysis (MRA). The findings reveal that PLS financing exerts a positive and significant effect on profitability, whereas non-PLS financing does not exhibit a significant effect. NPF moderates the relationship between PLS financing and profitability in a strengthening manner, while it moderates non-PLS financing in a weakening manner. Financial literacy does not moderate the relationship between PLS financing and profitability, but it diminishes the effect of non-PLS financing on profitability. The inequality index does not moderate PLS financing but reduces the effect of non-PLS financing on profitability. These results suggest that PLS financing is instrumental in maintaining the sustainability of BPRS. Additionally, PLS financing serves as a source of working capital for productive business customers, thereby enhancing the profitability of BPRS.

Item Type:	Journal Article
Keywords:	pls financing; non-pls financing; islamic rural bank; profitabilitya
Subjects:	14 ECONOMICS > 1403 Econometrics > 140304 Panel Data Analysis 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150201 Finance 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150203 Financial Institutions (incl. Banking) 14 ECONOMICS > 1403 Econometrics
Divisions:	Faculty of Economics > Department of Islamic Banking
Depositing User:	Titis Miranti
Date Deposited:	23 Oct 2026 14:54

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