IDEAS home Printed from https://ideas.repec.org/a/iaf/journl/y2023i1p115-121.html
   My bibliography  Save this article

The Influence of Islamic Corporate Governance and Islamic Corporate Social Responsibility on Financial Performance of Islamic Commercial Banks in Indonesia

Author

Listed:
  • Alfiah Permatasari

    (Sriwijaya University, Palembang, Indonesia)

  • Ahmad Syathiri

    (Sriwijaya University, Palembang, Indonesia)

  • Luk Luk Fuadah

    (Sriwijaya University, Palembang, Indonesia)

Abstract

Islamic banks in Indonesia must implement good corporate governance and adhere to the principles of corporate social responsibility to have good financial performance and gain customers' trust. This study aims to determine the impact of Islamic Corporate Governance (ICG) and Islamic Corporate Social Responsibility (ICSR) on financial performance based on the Islamic Performance Index of Indonesian Islamic Banks from 2015-2019. The study population included Islamic commercial banks registered with the Financial Services Authority (OJK) from 2015-2019. The sample size was determined by targeted sampling to obtain 9 Islamic banks. This study used a descriptive quantitative approach. The descriptive analysis aims to demonstrate that the ICG, ICSR and financial performance data are relevant and valid concerning the development of the Islamic banking industry from 2015-2019. Quantitative analysis to justify the proposed hypothesis uses the multiple linear regression method. The results show that (1) Islamic corporate governance (ICG) has a positive and significant impact on the financial performance of Indonesian Islamic banks; (2) Islamic Corporate Social Responsibility (ICSR) has a positive and significant impact on the financial performance of Indonesian Islamic Banks. Implementing the principles of good corporate governance, including transparency and openness, following sharia principles helps to increase the financial performance of Islamic banks in Indonesia. Sharia theory of corporations suggests that social responsibility is a form of human accountability to God. The primary goal of disclosing information to corporate stakeholders can minimize information asymmetries about the extent to which an institution is fulfilling its obligations to all stakeholders.

Suggested Citation

  • Alfiah Permatasari & Ahmad Syathiri & Luk Luk Fuadah, 2023. "The Influence of Islamic Corporate Governance and Islamic Corporate Social Responsibility on Financial Performance of Islamic Commercial Banks in Indonesia," Oblik i finansi, Institute of Accounting and Finance, issue 1, pages 115-121, March.
  • Handle: RePEc:iaf:journl:y:2023:i:1:p:115-121
    DOI: 10.33146/2307-9878-2023-1(99)-115-121
    as

    Download full text from publisher

    File URL: http://www.afj.org.ua/pdf/974-vpliv-islamskogo-korporativnogo-upravlinnya-ta-islamskoi-korporativnoi-socialnoi-vidpovidalnosti-na-finansovi-pokazniki-islamskih-komerciynih-bankiv-v-indonezii.pdf
    Download Restriction: no

    File URL: http://www.afj.org.ua/en/article/974/
    Download Restriction: no

    File URL: https://libkey.io/10.33146/2307-9878-2023-1(99)-115-121?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Islamic Corporate Governance; Islamic Corporate Social Responsibility; financial performance; Islamicity Performance Index; Islamic banks in Indonesia;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaf:journl:y:2023:i:1:p:115-121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Serhiy Ostapchuk (email available below). General contact details of provider: https://edirc.repec.org/data/iafkvua.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.