The impact of the Islamic performance index on the financial performance of Indonesian Islamic banks

Purpose This study aims to examine how profit-sharing-based financing, zakat performance, halal income versus non-halal income and return on assets (ROA) influence the growth of Islamic banking in Indonesia from 2018 to 2021. Design/methodology/approach The research uses a quantitative method with a causal approach. It focuses on a population of ten Islamic commercial banks listed with the Financial Services Authority. Secondary data, obtained from the annual reports published on the official websites of these banks, were used. The purposive sampling method is applied for data selection. Hypotheses are tested through multiple linear regression analysis using SPSS version 25. Findings The findings indicated that profit-sharing-based financing does not significantly affect the growth of Islamic banking assets in Indonesia. Similarly, the performance of zakat does not have a significant impact on the growth of these assets. Conversely, both halal income compared to non-halal income and ROA have a significant and positive effect on the growth of Islamic banking assets in Indonesia. Practical implications For investors, the Islamicity performance index can serve as a valuable factor in assessing company performance and making decisions in regards to the purchase of shares in Islamic banks. Originality/value Overall, profit-sharing-based financing, zakat performance, halal versus non-halal income and ROA, collectively, have a positive impact on the growth of Islamic banking assets in Indonesia.