Do profitability and firm size as moderating variables determine zakat payment?

Abstract

Purpose: This paper aims to determine the effect of profitability proxies by Return on Asset (ROA) and Return on Equity (ROE) on zakat payments and firm size as moderating variables in the Islamic Commercial Banks period 2016-2020.

Methods: This research employs a descriptive quantitative approach. The population in this research is obtained using a purposive sampling method at Islamic Commercial Banks in Indonesia, registered with the Financial Services Authority (OJK), during the period 2016-2020, and based on predetermined criteria, resulting in a sample of 9 banks. The total number of observations in this research is 45, which is used in the research hypothesis test employing the multiple linear regression analysis technique with the EVIEWS 12 application tool.

Findings: The results of this study indicate that, partially, Return on Asset (ROA) and Return on Equity (ROE) have a positive effect on company zakat payments. Firm size is unable to moderate the impact of Return on Assets (ROA) on company zakat payments. Still, it can moderate the effect of Return on Equity (ROE) on the company's zakat payments.

Practical implications: The findings of this research are expected to provide the company with complementary materials and valuable insights. Readers are expected to find the results of this research beneficial and can utilize them for the benefit of the reader.

Originality: This research has tremendous value. Islamic banking is expected to apply sharia principles in operational activities, in the case of this study, namely, the payment of zakat.