Abstract
Purpose — The aims of this research are to examine and analyze the extent of the role of the sharia supervisory board (SSB) in moderating the effect of good corporate governance on the financial performance of Islamic banks in Indonesia. Design/methodology/approach — The population in this research is 14 (fourteen) Islamic banks in Indonesia and the sample used in this research is 9 (nine) Islamic banks that have published financial reports, good corporate governance reports, and annual reports for the period 2010 - 2019. This research data processed were processed using reviews-10. Findings — The results of this research stated that good corporate governance has a significant effect on the financial performance of Islamic banks. The sharia supervisory board (SSB) moderates the effect of good corporate governance on the financial performance of Islamic banks in Indonesia. Practical Implications — The chow test stated chosen model as fixed effects, then the Housman test stated chosen model as random effects. Thus the model used in this research is a random effect. Originality/value — To complete the results, this research used in-depth interviews with practitioners of Islamic banks in Indonesia, specifically the department of compliance with Islamic banks. Keywords Good corporate governance, Sharia Supervisory Board, financial performance Paper Type Research Paper.
Highlights
Financial Services Authority (OJK) in June 2019 stated the development of Islamic banks in Indonesia currently can be seen from the amount Islamic banks are 14 banks, the sum of Islamic business units as many as 20 banks, 2,950 office networks, and Islamic rural banks as many as 164 banks
Based on the explanation above, we propose a role model for the sharia supervisory board (SSB) in moderating the effect of good corporate governance on the financial effectiveness of Islamic banks in Indonesia
Sharia supervisory board (SSB) has an important role in the development of Islamic banks in Indonesia, while the role of Sharia supervisory board (SSB) include: the presence of sharia supervisory board (SSB) in Islamic banks can determine the level of credibility of Islamic banks; sharia supervisory board (SSB) is a key trustees element in creating guarantees of compliance with Islamic principles; sharia supervisory board (SSB) is one of the main pillars in the implementation of good corporate governance
Summary
Financial Services Authority (OJK) in June 2019 stated the development of Islamic banks in Indonesia currently can be seen from the amount Islamic banks are 14 banks, the sum of Islamic business units as many as 20 banks, 2,950 office networks, and Islamic rural banks as many as 164 banks. The duty and responsibility of the sharia supervisory board (SSB) are to provide advice to directors and control all activities to be in accordance with Islamic principles. Islamic banks are financial institutions that operate in accordance with Islamic principles, meaning that the banks must comply with the sharia regulations in their operations, especially the ones that are concerned with the sharia procedures, guaranteeing compliance with sharia compliance in all of the banks’ fund management activities. Sharia is very important in the business activities of Islamic For this reason, the role of the sharia supervisory board (SSB) needs to be optimized to ensure that all Islamic bank's products and operational systems are based on Islamic principles. The sharia supervisory board (SSB) must always oversee the business activities of Islamic banks and provide opinions on the purity of the Islamic principles adopted
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