2025/03/01 by SAVON, Zakaria
paper · doi:10.48394/imist.prsm/rafi-v9i1.52807
Islamic banking plays a vital role in procuring funds for the economy. Islamic financing is mainly dependent on macroeconomic conditions due to its asset-backed nature. A significant portion of the assets held by Islamic banks are primarily derived via debt financing, namely through mechanisms such as Murabaha and Ijarah. Islamic financial institutions are exposed to many risks, including financing risk or credit risk. This risk refers to the possible financial losses that banks may experience when a debtor fails to satisfy their commitments to the bank. The non-performing finance rate is used as a metric for assessing this level of risk. Our study assesses the impact of key macroeconomic variables and monetary policy on the non-performing financing (NPF) rate of Islamic banks in Jordan. The investigation is carried out using an autoregressive distributed lag (ARDL) model spanning the period from the fourth quarter of 2013 to the first quarter of 2022. The findings indicate that monetary policy and economic growth impact the non-performing financing of Islamic banks in Jordan.