Islamic Profit-Sharing Finance and Sustainable Profitability: A Temporal Study Across Pre-, During-, and Post-COVID-19 Periods

This study investigates the impact of Islamic profit-sharing finance, specifically Mudharabah and Musyarakah, on profit-sharing income and sustainable profitability of Islamic banks across three temporal phases: pre-COVID-19, during COVID-19, and post-COVID-19.Using monthly secondary data from 13 Indonesian Islamic banks covering the period 2014 to 2023, the study applies Partial Least Squares Structural Equation Modeling (SEM-PLS) to examine the dynamic relationships among financing contracts, income, and net profit.The results reveal that in the pre-pandemic period, both financing contracts had limited influence on income and profitability.During the COVID-19 crisis, Musyarakah financing significantly affected both income and profit, while Mudharabah showed no significant impact.In the post-pandemic period, both financing modes demonstrated strong and significant effects, and profit-sharing income emerged as a key driver of net profit.These findings suggest that Islamic profit-sharing instruments-when managed effectively-can support financial resilience and long-term profitability, contributing to the broader agenda of sustainable development in Islamic finance.