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Islamic Profit-Sharing Finance and Sustainable Profitability: A Temporal Study Across Pre-, During-, and Post-COVID-19 Periods

In: Proceedings of the 7th International Conference on Applied Economics and Social Science (ICAESS 2025)

Author

Listed:
  • Luftianto Luftianto

    (Politeknik Negeri Bandung, Department of Accounting)

  • Setiawan Setiawan

    (Politeknik Negeri Bandung, Department of Accounting)

  • Ira Novianty

    (Politeknik Negeri Bandung, Department of Accounting)

  • Lina Herliana

    (Politeknik Negeri Bandung, Department of Accounting)

  • Nova Aulia Khoirunnisa

    (Politeknik Negeri Bandung, Department of Accounting)

Abstract

This study investigates the impact of Islamic profit-sharing finance, specifically Mudharabah and Musyarakah, on profit-sharing income and sustainable profitability of Islamic banks across three temporal phases: pre-COVID-19, during COVID-19, and post-COVID-19. Using monthly secondary data from 13 Indonesian Islamic banks covering the period 2014 to 2023, the study applies Partial Least Squares Structural Equation Modeling (SEM-PLS) to examine the dynamic relationships among financing contracts, income, and net profit. The results reveal that in the pre-pandemic period, both financing contracts had limited influence on income and profitability. During the COVID-19 crisis, Musyarakah financing significantly affected both income and profit, while Mudharabah showed no significant impact. In the post-pandemic period, both financing modes demonstrated strong and significant effects, and profit-sharing income emerged as a key driver of net profit. These findings suggest that Islamic profit-sharing instruments—when managed effectively—can support financial resilience and long-term profitability, contributing to the broader agenda of sustainable development in Islamic finance.

Suggested Citation

  • Luftianto Luftianto & Setiawan Setiawan & Ira Novianty & Lina Herliana & Nova Aulia Khoirunnisa, 2026. "Islamic Profit-Sharing Finance and Sustainable Profitability: A Temporal Study Across Pre-, During-, and Post-COVID-19 Periods," Advances in Economics, Business and Management Research, in: Jessica Olifia & Dewi Junita & Aprizal Putra & Susi Lestari & Sarah Ulfah Al Amany & Syafri Naldi (ed.), Proceedings of the 7th International Conference on Applied Economics and Social Science (ICAESS 2025), pages 557-566, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-990-2_37
    DOI: 10.2991/978-94-6463-990-2_37
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