The Ethical Mediator: Reconceptualizing Profitability as a Maqāṣid-Aligned Bridge Between Risk Management and Sustainable Growth in Indonesian Islamic Banking During Crisis
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Abstract
This study reconceptualizes profitability in Islamic banking not merely as a terminal financial goal, but as an ethical mediator aligned with Maqāṣid al-Sharī‘ah (the higher objectives of Islamic law) to bridge the gap between risk management and sustainable growth, particularly during economic crises. The conventional dichotomy between financial prudence and ethical mandates often creates operational tensions that are exacerbated during periods of instability, such as the global pandemic. Through a qualitative document analysis of annual reports, financial statements, and policy documents from Indonesian Islamic banks between 2019 and 2024—a timeframe that covers the COVID-19 pandemic and its subsequent recovery—this research examines how a Maqāṣid-aligned view of profitability integrates these traditionally separate domains. The findings reveal that when profitability is framed as a means to achieve ḥifẓ al-māl (preservation of wealth), foster ‘adl (justice) in economic circulation, and ensure systemic stability, it transforms from a potential conflict source into a powerful strategic tool. This reconceptualization enables banks to design risk-sharing instruments, such as mushārakah and muḍārabah, that are both financially resilient and socially contributive, thereby supporting inclusive, sustainable growth. The core argument posits that this integrative framework is vital to the resilience and authenticity of Islamic banking in Indonesia, offering a paradigm that informs foundational strategy rather than reactive crisis management. By utilizing this model, institutions can navigate future uncertainties while remaining true to their socio-economic mission.
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