The Effect of Islamic Corporate Governance and Islamic Corporate Social Responsibility on the Performance of Shariah Commercial Banks in Indonesia

Abstract

This study aims to investigate and analyze the influence of Islamic corporate governance (ICG) and Islamic corporate social responsibility (ICSR) on the performance of Sharia Commercial Banks in Indonesia during the five-year period from 2014 to 2018. The financial performance of the banks is assessed using the return on assets (ROA) and return on equity (ROE). Employing a purposive sampling method, data was meticulously collected from a sample of 11 Sharia Commercial Banks. Employing a quantitative research approach, the study employs multiple regression analysis to discern the relationships between the variables. The results reveal that Islamic corporate governance (ICG) does not wield a significant effect on the financial performance of Sharia Commercial Banks, as represented by the variables ROA and ROE. However, in contrast, Islamic corporate social responsibility (ICSR) demonstrates a positive and significant impact on the financial performance of Sharia Commercial Banks, as indicated by the proxies ROA and ROE. These findings contribute to the understanding of the complex interplay between governance, social responsibility, and financial performance in the context of Islamic banking, providing insights for both practitioners and scholars.