Abstract
This study aims to examine the effect of Good Corporate Governance on Financial Performance at Islamic Banks. The independent variable in this study is Good Corporate Governance as measured by the board of directors, the independent board of commissioners, the islamic supervisory board and the audit committee. The population in this study were 11 Islamic commercial banks listed on the Indonesia Stock Exchange. This research data was obtained from the annual report for 2015-2019. The results showed that the audit committee has an effect on financial performance as measured by return on assets, while the board of directors, independent commissioners, and islamic supervisory board has no effect on financial performance as measured by return on assets. Together the board of directors, independent commissioners, islamic supervisory board and audit committee have an effect on return on asset.
Highlights
We often hear that many companies have collapsed because the governance of a company is not good so that there are many frauds or practices of corruption, collusion and nepotism that occur, resulting in an economic crisis and a crisis of investor confidence, which results in no investor willing to buy the company’s shares. that is, it can be said that the company is not implementing good corporate governance.But this has no effect on islamic banks, because islamic banks are not burdened with the obligation to pay interest on deposits to their customers
The independent variable is good corporate governance as measured by the board of directors, independent board of commissioners, islamic supervisory board and audit committee and the dependent variable is the financial performance of islamic banks as measured by return on assets (ROA)
After analyzing and testing the effect of the hypothesis testing of the implementation of good corporate governance which consists of the board of directors, the proportion of the independent board of commissioners, the Islamic supervisory board, and the audit committee on company performance in 11 islamic banking companies listed on the Indonesia Stock Exchange in 2015-2019, respectively, the following conclusions are drawn: Discussion that has been described, the following conclusions can be drawn: Of all the independent variables that are thought to have an effect on financial performance, only the audit committee variable which has a positive effect on the financial performance of Islamic banking
Summary
We often hear that many companies have collapsed because the governance of a company is not good so that there are many frauds or practices of corruption, collusion and nepotism that occur, resulting in an economic crisis and a crisis of investor confidence, which results in no investor willing to buy the company’s shares. that is, it can be said that the company is not implementing good corporate governance.But this has no effect on islamic banks, because islamic banks are not burdened with the obligation to pay interest on deposits to their customers. Islamic banks only pay for the results to their customers according to the profits the bank gets from the investment it does With this system, islamic banks do not experience a negative spread as experienced by conventional banks that use the interest system. At a minimum, islamic banks have five operational principles consisting of: pure deposit principle, profit sharing principle, sale and purchase principle and profit margin, lease principle, and fee principle. This is evidenced by one of the islamic bank in Indonesia (at that time the only bank operating under the islamic system) which was not affected by economic conditions. Besides the many practices of corruption, collusion and nepotism (Eksandy, 2018)
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