The Banking and Finance Review

Profitability of Islamic Financing Tools

Tariq Alzoubi

Abstract


This research analyses the profitability of Islamic financing tools, based on a sample of 41 banks, from 13 MENA counties, over the period from 2006 until 2016. It uses using fixed effect panel data analysis, and the results show that although Islamic banks place more than 40% of their assets in “Murabaha” and “Ijara” financing these tools have no significant effect on profitability, Islamic banks’ profits come from “Mudarabah” and “Istisna” financing. The results also show that size has a positive significant effect while leverage has no significant effect, cash has a positive significant effect and security investments have no significant effect on profitability.

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