The Effect of Mudharabah Financing and Musyarakah Financing on Profitability (ROE) through Profit-Sharing Income in Islamic Banks in 2015-2018


Authors : Muhammad Helka Farras Riyadi; Budi Prijanto

Volume/Issue : Volume 8 - 2023, Issue 2 - February

Google Scholar : https://bit.ly/3IIfn9N

Scribd : https://bit.ly/3YbogQP

DOI : https://doi.org/10.5281/zenodo.7690224

This study aims to examine the effect of mudharabah and musyarakah financing on the profitability of Islamic banks through profit sharing. The approach used in this research is a quantitative approach. The samples used in this study were 9 Islamic banks during the 2015-2018 research period. Research data were analyzed using path analysis techniques with the help of the Smartpls program. The results of this study indicate that (1) Mudharabah financing has a positive and significant effect on profit sharing, meaning that the higher the mudharabah financing, the higher the profit sharing income for Islamic banks, and vice versa, mudharabah financing which is easy has the potential to reduce profit sharing income for Islamic banks; (2) Musyarakah financing has no effect on profit sharing, this means that the level of musyarakah financing has no effect on the level of profit sharing income of Islamic banks; (3) Mudharabah financing has a positive and significant effect on ROE, meaning that the higher the mudharabah financing, the higher the ROE value of the bank, and vice versa the lower the mudharabah financing, the lower the ROE value of Islamic banks; (4) Musyarakah income has a negative and significant effect on ROE, meaning that the higher the musyarakah financing, the lower the Islamic bank's ROE value, and vice versa the lower the musyarakah financing, the higher the Islamic bank's ROE; (5) Profit sharing income does not affect the profitability of Islamic banks, the level of profit sharing income does not significantly affect the ROE of Islamic banks; (6) Revenue sharing does not compensate for the effect of mudharabah financing on profitability and (7) Revenue sharing does not compensate for the effect of musyarakah financing on profitability.

Keywords : mudharabah financing, musyarakah financing, profitability, profit sharing.

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