The primary aim of this study is to explore the effects of macroeconomic variables on the profitability of Islamic banks in Algeria. The sample comprises Al-Baraka Bank of Algeria and Al-Salam Bank-Algeria, covering the period from 1992 to 2022. Profitability was assessed using the return on assets (ROA) The macroeconomic variables encompassed in this study comprised the GDP growth rate, inflation rate, and money supply growth. The necessary data was extracted from the annual reports of Algerian Islamic banks as well as the annual reports of the Bank of Algeria. To gauge the impact of each variable on the profitability of Islamic banks, the ARDL (AutoRegressive Distributed Lag) model was employed. This analysis was conducted using EVIEWS 12 software. The findings revealed the existence of a long-term equilibrium relationship between the independent variables and the dependent variable (return on assets in Islamic banks). However, it is worth noting that the effect of the examined independent variables on the dependent variable was notably subdued throughout the study period. This can be attributed to the dependency of the dependent variable on the fluctuations of global oil prices. Additionally, the absence of issues related to self-correlation of error sequences, coupled with the stability of capabilities over time, indicated the stability of the return on assets equation.

Algeria, ARDL model, Return on assets, Islamic banks, macroeconomic variables