Digital Mediation in Institutional Theory: How Transactional Digitalization Bridges Pressures and Performance in Islamic Finance
DOI:
https://doi.org/10.35891/zbgjcc47Keywords:
Institutional Pressure, Digital Transactions, Islamic Banking, Financial PerformanceAbstract
Purpose: This study aims to examine the influence of institutional pressures coercive, normative, and mimetic on the financial performance of Islamic banks in Indonesia, with digital transactions serving as a mediating variable in the context of rapid digital transformation.
Design/methodology/approach: This research adopts a quantitative approach using Partial Least Squares Structural Equation Modeling (PLS-SEM). Secondary data were collected from Indonesian Islamic banks over the period 2020–2024. The model analyzes both direct and indirect relationships between institutional pressures and financial performance, measured by return on assets (ROA), through the mediation of digital transactions.
Findings: The findings indicate that coercive, normative, and mimetic institutional pressures significantly drive the adoption of digital transactions in Islamic banks. Digital transactions have a positive and significant effect on financial performance. Coercive pressure influences profitability both directly and indirectly, while normative and mimetic pressures primarily affect financial performance through the mediating role of digital transactions.
Practical implications: The results provide valuable insights for policymakers and banking practitioners. Policymakers are encouraged to strengthen regulatory frameworks and digital infrastructure, while Islamic bank managers should leverage competitive and peer-driven digital strategies to enhance operational efficiency, competitiveness, and long-term sustainability.
Originality/value: This study contributes to the literature on Islamic banking and institutional theory by empirically demonstrating the mediating role of digital transactions in linking institutional pressures to financial performance within an emerging market context.
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References
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