JOURNAL OF HALAL REVIEW
Halal is a notion that spans boundaries and cultures. It is significant for both Muslims and non-Muslims. Halal has become a global movement that is not confined to Muslims or specific religions, but is tied to lifestyle. Consuming halal items and commodities and services that correspond to Islamic law (sharia) is referred to as the halal lifestyle. As a result, halal products are dependent not just on halal food, but also on tourism, finance, cosmetics, medicine, medical services, education, fashion, logistics, and arts and culture. Therefore, Journal of Halal Review welcomes strong evidence-based empirical studies and results-focused case studies that share research in product development and clarify best practices. Only articles with contributions will be published. The scope of the journal includes empirical and theoretical articles related to: a. Product and process issues (Example : Food chemistry and food biochemistry, Halal food processing, Agricultural industrial technology, Agro-industrial management and modeling, Industrial techniques and systems, Engineering and bioprocessing of halal, biomaterial products, Food Technology, Food Process and Processing, Pharmacy, cosmetics, Drugs, Slaughtering and Meat as well as matters correlated with halal) b. Product and service issues (Example: distribution strategies, product development strategies, halal management system, halal business & marketing, halal tourism, halal supply chain management, pharmaceuticals & personal care products, Halal Law, Halal Economic Studies, tourism and Sharia, Halal finance, Islamic banking process, Islamic bank products, governance and compliance, media and recreation, travel and hospitality, and halal-related services.)
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Credit Risk, Lending Activity, and Bank Performance Under Inflationary Pressure: Evidence From Islamic Banking in Indonesia
Mahmudatus Sadiyah;
Eva Harmelia Valentina
Journal of Halal Review Vol. 2 No. 1 (2026)
Publisher : Generate Digital Publishing
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DOI: 10.70764/gdpu-jhr.2(1)-01
Objective: This study aims to analyze the effect of financing risk and financing distribution activities on the performance of the Islamic banking industry in Indonesia, as well as to examine the role of inflation as a macroeconomic factor that influences this relationship. The main focus of this study is on the dynamics of the profitability of the Islamic banking industry in the face of financing expansion and inflationary pressures. Research Design & Methods: This study uses a quantitative approach with an explanatory design based on quarterly time series data. The unit of analysis is at the level of the Islamic banking industry in Indonesia. The dependent variable is industry performance, proxied by return on assets (ROA), while the independent variables include financing risk (non-performing financing/NPF), total financing transformed into natural logarithms, and inflation. The estimation is performed using the Common Effect Model (CEM) regression model, with additional testing through an interaction model to capture the role of inflation as a conditional factor. Findings: The results indicate that financing expansion has a negative and significant effect on ROA, suggesting that growth in financing has not been fully translated into improved profitability. Inflation exhibits a positive and statistically significant effect on ROA within the observed sample period, indicating the industry's capacity to adjust margins under prevailing inflationary conditions. Financing risk shows a negative but statistically insignificant effect. Furthermore, the interaction term between NPF and inflation is negative, implying that higher inflation intensifies the adverse effect of financing risk on industry performance. Implications & Recommendations: These findings emphasize the importance of strengthening financing quality, risk management, and macroeconomic policy coordination to maintain the sustainability of the Islamic banking industry's performance. Contribution & Value Added: This study provides empirical contributions by presenting industry-based evidence on the relationship between financing risk, financing, and inflation on the profitability of Islamic banking in developing countries.