Corporate Social Responsibility (CSR) and Financial Performance in Islamic Commercial Banks and Islamic Business Units in Indonesia

Abstract

This study aims to examine the relationship between corporate social responsibility (CSR) and financial performance in islamic commercial banks and islamic business units in Indonesia over period 2011-2016 . CSR disclosure in this study uses the Islamic Social Reporting (ISR) index and financial performance measures using Return on Asset (ROA) and Return on Equity (ROE), with source of the data coming from the annual reports of each bank. This study uses a control variable such as the number of directors, number of Sharia Supervisory Boards (SSB), bank size, and bank age. This research aims to find out whether corporate social responsibility (CSR) affects financial performance or financial performance that affects corporate social responsibility (CSR). The result of this study show that financial performance affects corporate social responsibility. ROA has a positive effect on corporate social responsibility (CSR) and ROE has a negative effect on corporate social responsibility (CSR). The limit number of the sample become a lack in this study.