Sustainable Business of Islamic Bank Through on the Islamic Corporate Governance and Islamic Financial Performance

Abstract

Objective - The objective of the study is to analyze the application of Islamic Corporate Governance (ICG) on Sustainable Business, focusing on Islamic Financial Performance as a mediating variable in Islamic Banks in Indonesia. Methodology/Technique - The population and sample in the study consists of 9 Islamic Banks. The study uses partial least square (PLS), and the data is collected from public reports for the period between 2010 and 2015. The variables of the study are: Islamic Corporate Governance as an independent variable, Sustainable Business as the dependent variable and Financial Performance as a mediating variable. Findings - The study shows that Islamic Corporate Governance (ICG) has a positive significant effect on Islamic Financial Performance, Islamic Corporate Governance (ICG) has no effect on Sustainable Business, and Islamic Financial Performance has a positive effect on Sustainable Business. The findings also show that Islamic Financial Performance can have an indirect impact to mediating the effect of Islamic Corporate Governance on Sustainable Business Islamic Bank. Novelty - Using Murabahah ratio to measure Islamic Financial Performance. Type of Paper: Empirical Keywords: Islamic Corporate Governance; Islamic Financial Performance; Sustainable Business. JEL Classification: G21, L22, M41.