This paper analyzes the profitability of 108 Islamic banks operating across 35 countries over the period 2005-2015 using the GMM estimator technique. We investigate the global panel of Islamic banks under various economic conditions. We study how bank specific factors and macroeconomic conditions impact bank profitability, measured by the return on average assets (ROAA), the return on average equity (ROAE), and the net interest margin (NIM), under different banking environments. The paper investigates the factors that affect the profitability of Islamic banks. The results reveal that bank size, credit risk, CIR, and deposit growth rates have a negative impact on profitability, while bank age, capital adequacy, and liquidity risk positively affect profitability. Moreover, our analysis show that macroeconomic factors measured by GDP growth rates and inflation have a positive impact on profitability. These findings suggest that, based on the current financial reporting system, Islamic banks resembles conventional banks in terms of profitability determinants.
JEL classification: G20; G21; Z12