El-kahfi | Journal of Islamic Economics

Financial Determinants of Profitability in Post-Merger Islamic Banking: Evidence from Bank Syariah Indonesia (2020–2024)

2025-05-17T20:45:04+07:00

The objective of study to determine the effect of Capital Adequacy Ratio, Financing to Deposit Ratio, and Non Performing Financing at PT Bank Syariah Indonesia. The type of research conducted was quantitative research which emphasizes numerical data (numbers) processed by inferential statistical methods (analyzing the relationship between variables by testing hypotheses). The data source of this research is obtained from secondary data, namely the quarterly financial statements of PT Bank Syariah Indonesia from 2020 to the second quarter of 2020 published on the website www.ojk.go.id. The results showed that: (1) Capital Adequacy Ratio has no effect on Return On Asset, (2) Financing to Deposit Ratio has a positive effect on Return On Asset, (3) Non Performing Financing has a negative effect on Return On Asset, (4) Capital Adequacy Ratio, Financing to Deposit Ratio, and Non Performing Financing jointly affect Return On Asset.

The Influence of Religiosity, Income, and Trust on Income Zakat Intention

2025-06-23T09:19:10+07:00

This study examines the impact of religiosity, income, and trust on individuals’ intention to pay income zakat in Talo District, Seluma Regency, Indonesia. A quantitative method was employed using a structured questionnaire distributed to 100 eligible Muslim respondents. The analysis was conducted through multiple linear regression. Results demonstrate that religiosity, income, and trust significantly affect zakat payment intention, with religiosity emerging as the strongest predictor. The model explains 50.7% of the variance in zakat intention. These findings suggest that enhancing religious commitment, economic capacity, and institutional trust is vital to fostering zakat compliance, especially in semi-rural communities. The study also underscores the need for targeted awareness campaigns and more transparent zakat management to strengthen public confidence in formal zakat institutions. By integrating behavioral and institutional dimensions, this research contributes to a more comprehensive understanding of Islamic philanthropic behavior in emerging economies.

The Impact of Islamic Banking Growth and Development on Public Trust in Indonesia

2025-05-17T20:45:04+07:00

The development of Islamic banking in Indonesia has shown significant progress, yet public trust remains a critical determinant for its sustainable growth. This study investigates the influence of Islamic banking growth and development on public trust, focusing on three key dimensions: digital innovation, asset growth, and financing expansion. The objective is to determine which factors most strongly affect trust and how this trust impacts customer loyalty and preference toward Islamic financial institutions. Using a quantitative survey method, data were collected from 400 respondents across various regions in Indonesia who are users or observers of Islamic banking services. The research employed statistical analysis techniques including descriptive statistics, classical assumption tests, and multiple linear regression analysis to examine relationships among the variables. The findings reveal that digital innovation has the most significant positive impact on public trust, followed by asset growth and financing performance. Trust, in turn, mediates customer loyalty and preference for Islamic banking. The study also finds that consistency in applying Shariah-compliant practices enhances credibility and long-term engagement with customers. This study contributes to the literature on Islamic banking by integrating Islamic ethical perspectives, including references from the Qur'an and Hadith, into the discourse on financial trust. Practically, the results highlight the importance of technological innovation and value-based service delivery in strengthening trust in Islamic banking institutions. The study recommends continuous investment in digital platforms, ethical financing models, and transparent communication strategies to improve trust and institutional sustainability.

Khairi Waqf as an Instrument of Islamic Social Finance: Empowering Education and Healthcare in Rural Indonesia

2025-05-17T20:45:04+07:00

This study investigates the empowerment of khairi waqf in advancing educational and healthcare services within a rural Indonesian context, specifically in Sido Sari Village, Sukaraja District, Seluma Regency. Using a qualitative descriptive approach, data were collected through in-depth interviews, field observations, and document analysis involving nazirs, village officials, educators, healthcare workers, and beneficiaries. Findings reveal that khairi waqf played a pivotal role in establishing early childhood education (PAUD), madrasah, and community health services (posyandu), significantly improving access and equity for marginalized populations. The waqf initiatives were deeply embedded in local participation, reflecting the values of sadaqah jariyah, ta‘awun (mutual cooperation), and hifz al-nafs and hifz al-‘aql as core principles of maqashid shariah. However, the study also identifies challenges related to limited operational funding, untrained nazirs, policy fragmentation, and declining youth engagement in waqf literacy. These issues underscore the need for transitioning from static to productive waqf models, formalizing multi-level governance, and integrating waqf into local development and religious education frameworks. This research contributes to the discourse on Islamic social finance and rural development by offering a context-sensitive model of waqf empowerment that combines spiritual intent, professional governance, and grassroots synergy.

Integrating Maqashid al-Shariah into Islamic Economic Practices: A Contemporary Analytical Framework and Its Applications

2025-05-17T20:45:05+07:00

The growing demand for ethical and inclusive economic frameworks has renewed scholarly interest in maqasid al-shariah as a foundational paradigm in Islamic economics. As the higher objectives of Islamic law, maqasid seek to protect religion (din), life (nafs), intellect (aql), lineage (nasl), and wealth (mal). This study employs a qualitative-descriptive approach using structured library research to analyze fifteen academic sources published between 2019 and 2025, focusing on how maqasid principles are conceptualized and implemented in Islamic finance, social policy, and cooperative systems. The findings reveal that while there is growing theoretical engagement with maqasid, practical applications remain limited by formalistic interpretations and insufficient institutional adaptation. Notable progress exists in areas such as mudharabah, takaful, and zakat-waqf integration, but broader reform is needed to shift from legal compliance to maqasid-oriented innovation. This research contributes to the theoretical advancement of Islamic economic thought by offering a synthesized and critical review of contemporary maqasid applications, and recommends the systemic integration of maqasid into policy-making, institutional governance, and economic design.

From Law to Practice: Assessing Productive Waqf Governance Under Indonesia’s Law No. 41/2004

2025-05-17T20:45:05+07:00

This study examines the implementation of Law No. 41 of 2004 on Waqf at the Muhammadiyah Mosque in Bengkulu City, focusing on governance gaps between local waqf management and the Indonesian Waqf Board (BWI). A qualitative case study was employed, with data collected through semi-structured interviews (8 nazirs and BWI officers), document analysis (financial reports, meeting minutes), and participant observation (3 plenary meetings). Thematic analysis followed Miles and Huberman’s (2020) interactive model. Key issues include: (1) Exclusive planning (100% of meetings excluded BWI, violating Article 43); (2) Nazir incompetence (78% lack management training); (3) Low asset productivity (15–40% utilization rates); and (4) Weak supervision (no BWI oversight). The study highlights systemic non-compliance with national laws and Islamic governance principles (e.g., shura). Comparatively, Malaysia’s corporate waqf models achieve 85% efficiency, suggesting adoptable reforms. Institutional reforms—collaborative planning, nazir capacity-building, and tiered supervision—are critical to align waqf management with Shariah and legal mandates, unlocking its socio-economic potential.

Integration of the Da'wah of Tawhid in the Economic Activities of Muslim Communities: Challenges and Strategies

2025-05-17T20:45:05+07:00

The integration of monotheism in economic activities will undoubtedly significantly impact the socio-economic well-being of Muslim societies. While a large body of literature discusses the relationship between religion and economics, few studies specifically explore the effective integration of the concept of tawhid into the economic practices of Muslim societies. This research aims to bridge this gap by examining a comprehensive approach to incorporating the principles of tawhid into economic activities. The aim is to create a strong synergy between faith and economic practices in daily life. A systematic analysis of secondary data sources, including journal articles, books, conference reports, and dissertations, identified key themes and practical methods for implementing the values of tawhid in various aspects of business operations, such as financial management, investment decisions, and employee relations. The findings are clear: Integrating tawhid strengthens the spiritual foundation of Muslim societies and contributes to more ethical, transparent, and sustainable business practices. However, implementing the strategy has encountered some challenges that must be addressed with suitable strategies, which are also outlined in this study. This research offers practical recommendations for economic actors and religious leaders, contributing to the growing knowledge of the intersection of religion and economics. It provides innovative solutions to contemporary challenges in the field.

Assessing Mosque-Based Zakat Fitrah Collection: Legal and Sharia Perspectives from Rural Indonesia

2025-05-17T20:45:05+07:00

This study investigates the implementation of zakat fitrah collection at Masjid Baiturrahim, Pulau Batu Hamlet, Jujuhan Ilir Subdistrict, through the lens of Islamic law. The research aims to evaluate whether the procedures carried out by mosque administrators align with Islamic legal principles, especially concerning the appointment of zakat administrators (amil), distribution methods, and compliance with the eight rightful recipients (asnaf). Using a qualitative descriptive approach, data were collected through observation, interviews, and documentation involving mosque management and local residents. The findings reveal that while the collection and distribution of zakat fitrah are driven by strong religious values and community participation, several elements deviate from Islamic jurisprudence. Notably, there is no formal appointment of amil, distribution does not fully consider all eight asnaf as mentioned in Qur’an Surah At-Taubah: 60, and the measurement of zakat (rice) lacks uniformity. These findings align with previous studies that highlight similar challenges in rural zakat practices, where traditional management often overshadows formal institutional structures. The discussion draws upon relevant Qur’anic verses, Hadiths, and scholarly opinions from classical and contemporary Islamic economists and jurists to assess the implications of the findings. It is recommended that mosque-based zakat management be integrated with recognized zakat institutions and follow standardized guidelines to enhance accountability and social impact. Strengthening legal literacy among community leaders and residents is also essential to ensure that the religious objectives of zakat—purification, justice, and welfare—are fully realized. This study contributes to ongoing efforts to improve grassroots zakat management in accordance with Sharia principles

The Digitalization of ZIS Services from a Maqashid Shariah Perspective

2025-05-17T20:45:05+07:00

This study aims to explore two main issues: (1) how the values of maqashid sharia can be integrated into the digitalization of Zakat, Infaq, and Sadaqah (ZIS) services, and (2) how the digitalization of ZIS services impacts social empowerment in the digital era. The advancement of information technology has encouraged zakat management institutions to adopt digital systems for collecting and distributing ZIS funds. However, it is essential to ensure that these innovations remain grounded in core sharia principles that emphasize justice, transparency, and social sustainability. This research employs a library research method with a descriptive-analytical and comparative approach. Data were collected from national and international scholarly journals accessed through databases such as Google Scholar, DOAJ, SINTA, and Scopus, using keywords such as “digital zakat,” “maqashid sharia,” “social empowerment,” and “technology-based zakat.” The relevant literature was analyzed to identify patterns of maqashid integration and to evaluate the social impact of ZIS digitalization. The findings reveal that the digitalization of ZIS has actualized maqashid sharia principles through various digital features, including online zakat education (hifz al-din), humanitarian aid via digital platforms (hifz al-nafs), transparent fund management (hifz al-mal), and Islamic financial digital literacy (hifz al-‘aql). Furthermore, digitalization has been proven to enhance social empowerment through improved efficiency in distribution, broader access, and sustainable economic strengthening of the beneficiaries (mustahik).

Islamic Legal Perspectives on Local Traditions during Ramadan: A Case Study of Kanagarian Kamang Baru

2025-05-17T20:45:05+07:00

This study investigates the integration between local customs (adat) and Islamic law (Sharia) in the context of Ramadan traditions in Kanagarian Kamang Baru, West Sumatra. Employing a qualitative ethnographic approach combined with normative Islamic legal analysis, the research explores how rituals such as balimau (pre-Ramadan purification), mangaji pasia (Qur'anic memorization by the sea), and inter-jorong communal iftar serve not only as cultural expressions but also as vehicles for religious devotion and communal identity. Data were gathered through observation, in-depth interviews with religious and customary leaders, and document analysis of local religious texts and practices. The findings demonstrate that while certain elements—particularly in balimau—pose ethical concerns from the standpoint of Islamic law (e.g., gender mixing), the community reconciles these practices through local interpretations rooted in ʿurf (custom). The synthesis between adat and Sharia is framed within the objectives of Islamic law (maqāṣid al-sharīʿah), emphasizing the values of purification, education, and social harmony. This research confirms that local traditions can enrich Islamic practice without violating its core principles, as long as proper ethical boundaries are maintained. The study contributes to the growing discourse on Islam Nusantara and advocates for context-sensitive Islamic legal frameworks that appreciate cultural diversity while upholding normative Islamic values. This paper underscores the role of religious scholars and traditional leaders in facilitating a balanced interpretation that resonates with both religious orthodoxy and local cultural wisdom.

Human Resources Development for Competitive Innovation in Sharia Banks: A Case Study of BSI KCP Kopo

2025-05-17T20:45:05+07:00

Along with the rapid development of technology and the increasingly globalization of the world, the banking sector faces increasingly complex challenges. Fierce competition, changing consumer behavior, and advances in information technology are forcing banking institutions to adapt and innovate in their products and services. This analysis aims to provide an in-depth understanding of the role of human resources (HR) in encouraging innovation in the banking sector, especially in Islamic banking. This study uses a qualitative approach with a phenomenological study design to explore the experiences and perceptions of Islamic banking employees about the importance of human resource competencies in supporting more competitive service innovation. The main results of the study show that human resource competencies, especially in terms of creativity, technological expertise, and understanding of sharia principles, are key factors in driving service innovation. However, Islamic banking faces major obstacles in recruiting and retaining top talent due to stiff competition with more established conventional banks, offering more attractive compensation and benefits. This study reveals how employees' perception of limitations in human resource management has a direct impact on the dynamics of innovation in the context of value-based Islamic banking. The results of the research will enrich the literature on sharia value-based HR management with a focus on the relationship between individual competencies and service innovation in the ethics-based financial sector. The success of innovation in Islamic banking is highly dependent on the quality and strategy of human resource management, which must proactively address external challenges by prioritizing value-based competency development and innovation sustainability.

The Role of Pesantren in Economic Empowerment of the Ummah: A Qualitative Descriptive Study in Indonesia

2025-05-19T11:31:27+07:00

Pesantren, or Islamic boarding schools, hold strategic potential in advancing the economic empowerment of Muslim communities in Indonesia, particularly in rural and underserved regions. This study investigates how pesantren contribute to the economy of the ummah through institutional business practices, student entrepreneurship incubation, and community integration. Employing a qualitative descriptive approach, data were collected from three pesantren in Java through in-depth interviews, observations, and document analysis. The findings reveal three major themes: (1) pesantren serve as localized economic actors by managing small-scale agribusinesses and cooperatives, although most lack formal business structures; (2) some pesantren have developed business incubator programs to train santri in entrepreneurship, though these remain informal and unsupported by structured curricula; and (3) strategies to enhance pesantren’s economic role include capacity building, stakeholder collaboration, digital transformation, and alignment with national policies. These findings are analyzed in light of Islamic economic principles, maqashid shariah, prophetic traditions, DSN MUI regulations, and scholarly perspectives on Islamic entrepreneurship. The study concludes that while pesantren have great potential as agents of economic empowerment, sustainable impact requires institutional reform, structured educational integration, and systemic policy support.

The Islamic Perspective on Managing Youth Wealth in Sharia Finance

2025-05-19T14:41:45+07:00

This study examines the Islamic perspective on the financial management of youth via the lens of maqasid syariah, encompassing five principal objectives: orientasi ibadah (worship orientation), orientasi jiwa (spiritual orientation), orientasi akal (mindful orientation), orientasi keturunan (offspring orientation), dan orientasi harta (property orientation). The research seeks to provide a financial management framework for youth, grounded in Syariah principles and an ibadah-focused perspective that regards wealth stewardship as an aspect of devotion to Allah. A qualitative methodology was utilized, incorporating comprehensive interviews with Islamic finance scholars, young practitioners, and community leaders, alongside document analysis of both ancient and contemporary Islamic economic literature. The results indicate that proficient youth money management is not solely transactional but transformative—cultivating spiritual discipline (ibadah), psychological equilibrium (nafs), intellectual development (‘aql), familial duty (nasl), and sustainable financial practices (mal). The study reveals a deficiency in contemporary financial education for Muslim adolescents, frequently devoid of Syariah value integration. This research underscores the significance of early financial education that internalizes maqasid-oriented principles, resulting in more responsible, ethical, and influential financial actions. The proposed approach aids in the formulation of policies for Islamic financial literacy programs and bolsters youth empowerment initiatives by synchronizing financial behaviors with enduring spiritual and societal welfare

Revisiting the Role of Institutional Ownership in Sharia-Compliant Stock Performance: Evidence from the Jakarta Islamic Index (2020–2023)

2025-05-19T14:45:41+07:00

This study examines the effect of institutional ownership on the performance of Sharia-compliant stocks listed on the Jakarta Islamic Index (JII) during the period 2020–2023. Using a quantitative research approach with an ex post facto design, this study analyzes secondary data from 16 companies that consistently appeared in the JII for four consecutive years. The stock performance was measured using annual log-returns, while institutional ownership was calculated as the percentage of shares held by institutional investors. The data were analyzed using simple linear regression after fulfilling classical assumption tests, including normality, linearity, and heteroscedasticity tests. The results show that institutional ownership has a negative but statistically insignificant effect on Sharia stock returns, explaining only 3.4% of the variation. These findings imply that institutional ownership is not a dominant factor influencing the performance of Sharia stocks in Indonesia, particularly during periods of market volatility. Instead, factors such as Sharia governance quality, ethical compliance, and sector-specific risks may play a more important role. This study contributes to the literature on Islamic capital markets by offering empirical evidence that conventional ownership-performance models may have limited applicability in Sharia contexts and encourages future research to consider alternative explanatory variables grounded in Islamic principles

Indicators of Sharia-Compliant Hotels as a Strategy for Advancing Halal Tourism in Blitar Raya

2025-05-19T21:22:15+07:00

Indonesia seeks to establish itself as a leading global destination for inclusive tourism based on Islamic values, one of which is the provision of sharia-compliant hotels, particularly in the Blitar Raya region. Such accommodations have significant potential to attract Muslim travelers who seek comfort and peace aligned with sharia principles. While Muslim-friendly tourism ensures basic amenities—such as prayer spaces and halal food—sharia hotels provide a more comprehensive implementation of Islamic values across all aspects of service and management.

This study investigates the urgency of developing sharia-compliant hotels in Blitar Raya as a strategic driver for advancing Muslim-friendly tourism. It also aims to formulate a set of feasibility indicators that align with Islamic principles. Using a qualitative research design, this study adopts a phenomenological approach grounded in the framework of maqāṣid al-sharīʿah to assess both the necessity and criteria for Muslim-friendly hotel development. Findings reveal that while the demand for sharia-compliant hotels in the region is growing, there is no standardized framework to guide their implementation. Therefore, measurable and practical indicators are essential for evaluating hotel readiness and promoting consistent standards. These indicators include physical elements (e.g., halal food, worship facilities) and non-physical factors (e.g., Islamic service ethics, management style, and environment). The study contributes by proposing ten weighted indicators for assessing the suitability of hotels in Blitar Raya for Muslim tourists. This framework serves to enhance service quality, support tourism development, and strengthen Indonesia’s role as a global Muslim-friendly tourism.

The Contribution of UIN SATU Tulungagung to MSME Welfare in Plosokandang Village: An Islamic and Positive Law Perspective

2025-05-30T07:12:08+07:00

The contribution of higher education institutions to the development of micro, small, and medium enterprises (MSMEs) plays a strategic role in enhancing community welfare and strengthening the local economy. This study investigates the involvement of UIN Sayyid Ali Rahmatullah (UIN SATU) Tulungagung in supporting MSMEs in Plosokandang Village, Tulungagung Regency, from both Islamic and positive (national) legal perspectives. Using a descriptive qualitative method, data were collected through field observations, in-depth interviews with 15 MSME actors, and analysis of relevant documents and literature. The findings show that the university contributes through business training, student internships, mentoring programs, and market access facilitation. Concretely, 73.3% of respondents reported increased monthly income by 15–25% after engaging in campus-supported activities. From an Islamic law standpoint, these efforts reflect the values of ta’awun (mutual assistance) and maslahah (public benefit), while from the perspective of positive law, they align with the tri dharma of higher education, particularly community service. In conclusion, UIN SATU’s active role in MSME empowerment is well-grounded in both Islamic and national legal frameworks and significantly contributes to local economic resilience

Determinant of Net Profit Margin in Islamic Bank: Evidence From Indonesia

2025-05-30T08:16:53+07:00

This study investigates the factors influencing the Net Profit Margin (NPM) of Islamic banks in Indonesia, focusing on risk aversion (CAP), default risk (NPF), liquidity (FDR), and operational size (SIZE). The research aims to explore how these variables affect profitability in the Indonesian Islamic banking sector. The study uses balanced panel data from Islamic banks over the period 2014–2023 and applies panel regression analysis to examine the relationships between the variables. The findings indicate that risk aversion negatively affects NPM, while liquidity and operational size have a positive influence on NPM. Default risk does not significantly impact NPM. Additionally, the study includes a dummy variable for the COVID-19 pandemic, which shows a negative effect on NPM, reflecting the adverse impact of the pandemic on bank margins. This research contributes to the literature on the determinants of profitability in Islamic banking by providing new insights into how risk aversion, default risk, liquidity, and operational size influence NPM, particularly during periods of economic disruption

Islamic Financial Inclusion and the Empowerment of Micro Enterprises in Remote Regions

2025-06-14T17:09:08+07:00

This study explores the role of Islamic Financial Institutions (IFIs) in enhancing access to microenterprise financing in rural Indonesia through a qualitative literature review approach. Drawing on 25 peer-reviewed sources published between 2019 and 2024, the research identifies four key dimensions: institutional outreach, rural access barriers, effectiveness of sharia contracts, and integration of social and digital finance. Findings reveal that although IFIs have grown significantly in terms of assets and regulatory structure, their inclusion strategies remain inadequate for rural populations. Sharia-based contracts like mudharabah and musyarakah are underutilized due to operational complexities and lack of financial literacy. Moreover, the integration of zakat and other social finance tools with digital platforms is still fragmented. The study emphasizes that Islamic finance must move beyond formal compliance toward ethical inclusivity by addressing structural, behavioral, and technological barriers. The research concludes that achieving maqashid shariah in microfinance requires institutional reform, cross-sector collaboration, and a renewed commitment to justice, transparency, and community empowerment.