Evaluating the Financial Performance of Islamic Banks in Light of Diversified Financing Products: The Case of the Islamic Bank of Jordan

Abstract

This study aimed to measure the impact of Islamic financing products, specifically Murabaha and Istisna, on the financial performance of the Jordan Islamic Bank from 2020 to 2024. Utilizing a descriptive-analytical approach and Ordinary Least Squares (OLS) regression, the research analyzed the relationship between financing ratios and profitability indicators, including ROI, ROE, and Profit Margin. Findings revealed a significant dominance of Murabaha, with an average employment rate of 81.4%, compared to a marginal 0.66% for Istisna. Statistical tests indicated no significant impact of these products on financial performance at the 0.05 level, likely due to the limited time series and conservative management policies. The study recommended diversifying the financing portfolio and activating Istisna and Musharaka contracts to mitigate concentration risks, alongside enhancing operational efficiency to maintain profitability margins.