The Effect of Islamicity Performance Index, Sharia Compliance Ratio, and Intellectual Capital on Profitability (ROA) of Islamic Commercial Banks in Indonesia, 2021–2024

Abstract

This research investigates the impact of the Islamicity Performance Index (IPI), Sharia Compliance Ratio (SCR) measured by Islamic Income Ratio (IIR), and Intellectual Capital (IC) assessed through Value Added Intellectual Coefficient (VAIC) on the profitability (ROA) of Islamic commercial banks in Indonesia from 2021 to 2024. The study is motivated by the stagnation of ROA even though assets and financing grew significantly. Employing a quantitative explanatory method with panel data regression in EViews 14, this research examines 8 Islamic commercial banks chosen using purposive sampling, yielding 32 observations. The Random Effect Model (REM) was selected and adjusted for heteroscedasticity using White robust standard errors. The findings reveal that IPI does not significantly influence ROA (p = 0.7071), IIR does not significantly influence ROA (p = 0.7705), whereas VAIC has a positive and significant impact on ROA (p = 0.0001; coefficient = 0.646867). At the same time, IPI, SCR, and IC together have a significant impact on ROA (F = 0.0000), with an R-squared of 96.34%. These results indicate that intellectual capital is the primary internal determinant of profitability, whereas Islamic values and sharia compliance are still crucial for legitimacy yet have not been directly translated into higher ROA. Bank managers should focus on human, structural, and capital-employed efficiency while maintaining sharia compliance.