Year: 2025
Type: article
Abstract: Objective: This study investigates the factors affecting the profitability of Moroccan participatory banks, including performance and governance. It analyzes their impact on financial performance from 2018Q4 to 2021Q2. Theoretical Framework: This study is based on financial stability, economies of scale, risk-return trade-off, and corporate governance principles, offering a solid foundation for analyzing participatory banks' profitability. Method: A multiple regression model was used to analyze quarterly financial data. Key variables included capital adequacy ratio (CAR), bank size (SIZE), liquidity adequacy ratio (LAR), non-performing financing (NPF), and governance indicators such as Sharia Supervisory Board (SSB) independence and Sharia Compliance Score (SCS). Results and Discussion: Findings show that higher CAR and larger bank size enhance profitability, while excess liquidity negatively impacts financial performance. Surprisingly, NPF correlates positively with ROE, suggesting that risk exposure may lead to higher returns. Strong governance, particularly SSB independence and SCS, improves profitability. The COVID-19 pandemic significantly reduced profitability during affected quarters. Research Implications: This study provides practical insights into optimizing capital allocation, risk management strategies, and governance frameworks to sustain participatory banks' performance in dynamic financial environments. Impacted sectors include Islamic finance, banking regulation, and corporate governance practices. Originality/Value: By elucidating the nuanced relationships between financial metrics and profitability in participatory banks, this research contributes new perspectives to the literature. Its findings underscore the relevance of tailored financial strategies and robust governance frameworks in ensuring sustainable financial performance amidst economic uncertainties.
Authors: Lakmiti Lalla Nezha, El Alaoui Ghyzlane, Hakkou Meryem, Mansouri Mohamed
Institutions: Université Privée de Marrakech, Université Ibn-Tofail
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4407828095