Title : Nexus Between Sharia Governance and Financial Performance: Evidence From Indonesian Islamic Banking
Authors:
- Hanifiyah Yuliatul Hijriah
- The Righteousness of the Most Gracious
- Bani Alkausar
- Nisful Laila
- Muhammad Ubaidillah Al Mustofa
Department : Islamic Economics
Journal Name : Journal of Islamic Economics and Finance
Kinds of Journal : S1 / S2
Keywords : Sharia governance, financial performance, Islamic banking, Sharia Supervisory Board, financial sustainability.
Abstract:
The Relationship Between Sharia Governance and Financial Performance: Evidence from Indonesian Islamic Banking. This study critically evaluates the effectiveness of Sharia governance on the financial performance of Islamic banking in Indonesia. Given the absence of regulations governing the minimum structure and optimal qualifications of the Sharia Supervisory Board (SSB), this study aims to empirically examine the relationship between SSB characteristics and financial performance. Using a quantitative approach, this study analyzes data from 14 Islamic banks over seven years (2014-2020). The results of multiple regression analysis indicate that SSB size, educational background, and financial and accounting expertise have little impact on the financial performance of Islamic banks. Interestingly, cross-membership in the SSB was found to have a negative effect. These findings, coupled with the observation that SSBs often lack banking and finance backgrounds, indicate a potential disconnect between Sharia governance and managerial activities. This study recommends the establishment of clear and comprehensive regulations to strengthen the composition and competency of the SSB, ultimately driving the sustainable development of Islamic banks in Indonesia.
For details : https://jurnal.ar-raniry.ac.id/index.php/Share/article/download/20233/9383
