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This study investigates the impact of the Financing to Deposit Ratio (FDR) on the profitability of Islamic commercial banks in Indonesia, with a specific focus on Return on Assets (ROA) as the profitability metric. Despite the significant growth of Islamic banking in Indonesia, the challenge of maintaining profitability remains critical. The analysis involved classical assumption tests including normality, multicollinearity, autocorrelation, and heteroskedasticity tests, followed by regression analysis. The results indicate that FDR does not have a statistically significant effect on ROA. These findings challenge the assumption that FDR is a primary determinant of profitability in Islamic banks and suggest that other factors and financial indicators must be considered. The study underscores the importance of comprehensive financial management strategies and robust risk management practices. It also highlights the relevance of agency and signaling theories in improving governance and financial performance. The findings provide valuable insights for bank managers and policymakers to enhance the financial health and sustainability of Islamic commercial banks in Indonesia. Further research should explore additional variables and more complex models to deepen the understanding of profitability determinants in Islamic banking.
Wahyudi et al. (Wed,) studied this question.