Wahidullah

Type of the article: Research Article

Abstract
The rapid development of Islamic banking in Indonesia faces challenges in managing Non-Performing Financing (NPF), requiring an innovative approach based on Islamic values. Mabda’ At-Ta’awun, an Islamic cooperative principle that emphasizes collaboration between banks and customers to resolve problem financing, presents a promising alternative solution. This study aims to analyze the effectiveness of implementing Mabda’ At-Ta’awun in increasing the recovery rate and reducing the NPF ratio in Indonesian Islamic banking, as well as to evaluate the influence of bank characteristics on financing risk management performance. The research methodology uses a quantitative approach with panel data analysis from five Indonesian Islamic banks: PT Bank Muamalat Indonesia, PT Bank BCA Syariah, PT Bank BTPN Syariah, PT Bank Mega Syariah, and PT Bank Syariah Bukopin for the period 2016–2024 (45 bank-year observations). Fixed Effects Panel Regression, Seemingly Unrelated Regression (SUR), and Granger Causality Tests are used to identify causal relationships between variables. The results of the study demonstrate the effectiveness of Mabda’ At-Ta’awun in improving the performance of problem financing management: the financing recovery rate increased by 18.47% and the problem financing ratio decreased by 2.34%. Large banks face implementation flexibility constraints, while banks with high profitability demonstrate superior recovery performance. This study provides empirical evidence that implementing the Ta’awun principle can create a sustainable competitive advantage in Islamic banking financing risk management through a win-win solution approach that integrates Sharia compliance aspects with business effectiveness.