Risk Management and Sharia Conformity and Profitability Performance with Moderating Effect from Third Party Fund

Abstract

This research analyzes the influence of financing risk, liquidity risk and operational efficiency risk on the performance of sharia compliance and profitability of islamic commercial banks by involving the moderating effect from third party funds. The research population consists of islamic commercial banks in Indonesia for the 2020-2023 period. This research is quantitative research using panel data regression. The result states that financing risk has a significant negative effect on sharia conformity, but has no effect on profitability. Liquidity risk does not affect both sharia conformity and profitability. Operational efficiency risk has no effect on sharia conformity, but has a significant negative effect on profitability. TPF is able to moderate the influence of financing risk on sharia conformity and operational efficiency risk on profitability. Based on these results, sharia commercial banks should pay more attention to implementation of financing risk management and operational efficiency risks in order to improve on their sharia conformity and profitability performance. Apart from that, sharia commercial banks also need to improve their ability to collect TPF in order to support more optimal bank performance. Further research is recommended to examine other factors such as corporate governance which have not been examined in this study.