The mediating effect of risk management for Palestinian Islamic banks’ strategic planning and profitability performance

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This paper examined the mediating effect of risk management for strategic planning and profitability of Islamic banks in Palestine. The questionnaires were distributed randomly among 97 directors who have experience in strategic and risk management. A structural equation model was employed to test the research hypotheses. The result revealed that strategic planning and risk management have a significant positive effect on profitability, while strategic planning has a significant positive effect on risk management. In addition, risk management was evidenced to partially mediate the linkage between strategic planning and profitability. The current study yielded support for the claim that risk management played a significant mediating role in the relationship between strategic planning and profitability. Bank directors having good strategic planning and effective risk control tend to get a higher level of profitability. Therefore, Islamic banks should construct a proper strategy in line with their risk management practices and provide a robust risk assessment to protect their financial resources. Ultimately, they can attain superior profitability.

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    • Figure 1. Measurement model
    • Figure 2. Structural model 1
    • Figure 3. Structural model 2
    • Figure 4. Structural model 3
    • Figure 5. Mediation effect model 4
    • Table 1. Convergent validity and reliability
    • Table 2. Models fit summary
    • Table 3. Hypotheses testing
    • Conceptualization
      Mohammed Abusharbeh
    • Data curation
      Mohammed Abusharbeh
    • Formal Analysis
      Mohammed Abusharbeh
    • Funding acquisition
      Mohammed Abusharbeh
    • Investigation
      Mohammed Abusharbeh
    • Methodology
      Mohammed Abusharbeh
    • Project administration
      Mohammed Abusharbeh
    • Resources
      Mohammed Abusharbeh
    • Software
      Mohammed Abusharbeh
    • Supervision
      Mohammed Abusharbeh
    • Validation
      Mohammed Abusharbeh
    • Visualization
      Mohammed Abusharbeh
    • Writing – original draft
      Mohammed Abusharbeh
    • Writing – review & editing
      Mohammed Abusharbeh