An Analysis Of The Effects of Profitability and Total Assets On Corporate Zakat: A Case Study Of Islamic Commercial Banks In Indonesia

Abstract

The objective of this study is to examine the impact of profitability, Return on Equity (ROE), and assets on the corporate zakat of Islamic banking institutions in Indonesia. The research employed secondary data and was examined using a quantitative technique, specifically employing a panel data regression model. The data for this study was collected from Islamic Commercial Banks that published zakat funds between the years 2011 and 2021. Net Profit Margin (NPM) serves as a proxy for measuring the profitability of Islamic commercial banks. The findings indicate that the model employed in this study, which incorporates the variables of NPM, ROE, and assets, collectively exerts a statistically significant influence on corporate zakat. However, each element has a distinct impact on corporate performance. The findings of the study indicate that both NPM and assets exhibit a statistically significant impact on the zakat contributions made by companies. However, it is observed that the ROE does not have a significant effect on the zakat contributions made by companies. It can be firmly asserted that there is a positive correlation between a corporation's NPM and assets, and the corresponding increase in the amount of corporate zakat. This has the potential to provide the government with the opportunity to promote the performance of the Islamic banking industry, leading to an increase in their NPM and assets. This, in turn, can contribute to the social effect of the industry through the utilization of zakat.