Islamic Banking Performance in Majority and Minority Muslim Region

Abstract

Islamic banking attracts many consumers in many Muslim-majority countries. The obligation to follow Islamic law is a critical factor making this banking type so popular in Muslim communities. It is also worth noting that many non-Muslims are also consumers of Islamic banks. Non-Muslims find the no-interest and transparent business operation of Islamic banks appealing. This study examines the strategic collaboration and internal resources on Islamic banking business performance with Muslim majority and minority regions as moderators. Another objective of this study is to analyze strategic collaboration as a mediator in the relationship between internal resources and business performance. This research used a quantitative method with structural equation modeling analysis. Data was collected from 300 sharia bank executives throughout Indonesia. Data was processed using SmartPLS version 4.1.0 to analyze the hypotheses of this study. The results showed that internal resources have an impact on business performance (β =.36, p = .00). Strategic collaboration mediated the relationship between internal resources and business performance (β =.16, p = .00). Furthermore, the Muslim majority and minority regions have no moderation impact on strategic collaboration on business performance (β = .03, p = .40). Muslim majority and minority regions also have no moderation effect on internal resources on business performance (β =.01, p = .75), This research finds that Muslim majority and minority regions has significant direct effect on business performance.