Stakeholder Perception on Corporate Social Responsibilities (CSR) Effectiveness in Islamic Banking

Abstract

Based on stakeholder theory, the main goal of a company is to maximize and create added value for all stakeholders. In general, some argue that the existence of an organization or company aims to create value for shareholders, they are also expected to be socially responsible for the society in which they operate. This study try to describe and explain the level of effectiveness of Islamic Bank CSR in ethical and philanthropic responsibilities indicators based on stakeholder perceptions using Structural equation model (SEM). This study found that Islamic banks in Indonesia have been considered quite effective in terms of Corporate Social Responsibility. This study enlightens and recommends that Islamic Banks be actively involved in the activities of Corporate Social Responsibility so as to be effective in promoting Islamic Financial Institutions (IFIs). In the end, there are several conclusions, namely suggesting that Islamic Banks in Indonesia should not only rely on marketing strategies in spiritual terms to attract customers to use their products, but to get customers by being actively involved in CSR activities. The impact is not only to attract customers, but also to contribute to the social life and welfare of the community and the surrounding environment.