Annual Reports Of Islamic Banks Research Articles

Shariah governance framework for Islamic banking in Pakistan: a critical review and comparison with AAOIFI

Purpose The study aims to critically review the Shariah governance framework for Islamic banking prevailing in Pakistan and provide a comparison with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Design/methodology/approach It analyzes 16 circulars issued by the State Bank of Pakistan (SBP) since 2002, including three Shariah governance frameworks in 2014, 2015 and 2018. Additionally, the study compares the SBP and AAOIFI Shariah governance standards to evaluate the soundness of the SBP framework against international benchmarks. Findings Pakistan’s Shariah governance model is centralized, with the SBP’s Shariah board having ultimate authority. The SBP has provided a comprehensive Shariah framework, which includes among others, the criteria for the qualifications and conflict of interests of Shariah members. Both AAOIFI and SBP Shariah governance frameworks have similarities and differences in terms of the tenure of Shariah Supervisory Board (SSB) members, reporting line of SSB, number of SSB meetings, minimum experience of SSB members, primary duties of Shariah board, code of ethics and conduct for SSB and management and requirement of publication of SSB report in the annual report of Islamic banks. The frameworks differ in terms of the delegation of SSB powers, assessment and appraisal of SSB effectiveness and outsourcing of Shariah Compliance Department and Internal Shariah Audit Unit. Practical implications The study recommends expanding the qualification criteria for Shariah advisors to include additional degrees and qualifications, upholding stringent criteria for conflict of interests and promoting stakeholder consultation through exposure drafts. Originality/value To the best of the authors’ knowledge, this is the first of its kind which critically review and compare the Shariah governance framework prevailing in Pakistan.

Background of The Board of Director and Financial Intermediary: Does It Contribute to The Performance of Islamic Banks?

This study aims to examine the effect of women leadership, education level, financing and investment on the profitability of Islamic banks. The type of data used is secondary data in the form of annual reports of Islamic banks for the 2016-2020 period. Data collection was carried out using purposive sampling technique so that the sample obtained for research was 12 Islamic banks. The analytical tool used in this panel data regression with dummy variables is e-views 10 software. The results showed that partially financing and investment have a positive and significant effect on the profitability of Islamic banks, while women leadership and education level have no effect on profitability. Simultaneously, women's leadership, education level, financing and investment have an influence on profitability. Then based on the results of the determination test shows that the independent variables in the form of women's leadership, education level, financing and investment are able to explain the dependent variable profitability by 99%, while the other 1% is explained by other variables not mentioned in this study.

An analysis of zakat disclosure in Islamic banks

Purpose This paper aims to investigate the zakat disclosure of Islamic banks at the global level. It is important for depositors and shareholders of Islamic banks to know whether the bank is paying zakat on their behalf or not. Additionally, disclosing the calculation method used is also necessary to eliminate uncertainties resulting from ambiguous reporting that can mislead the stakeholders. This issue becomes more obvious when considering that depositors and shareholders may have different accounts with different Islamic banks, which makes it quite confusing to have multiple ways of zakat calculation or different approaches on who is the party that pays it. This study analyzes the current practices across 13 countries and recommends best practices. Design/methodology/approach The objective of the paper objective is achieved through analyzing the annual reports of 34 Islamic banks in 13 countries for the years 2014 and 2019. It further quantifies the zakat disclosure by constructing a zakat disclosure index. This index considers the disclosure of four major constituents covering the amount and the responsibility for payment, the calculation method, the involvement of the Shariah board and the zakat duty on investment account holders. For further robustness, this study is further supported by content analysis measures using the zakat word count in annual reports. Findings The results indicate a major issue in zakat disclosure. The overall average of disclosure index is low. Most of the banks disclose limited information about zakat, such as the amount and the responsibility for payment, in their annual reports. Less than 40% of the examined banks disclose information about the role of the Shariah board in zakat calculation, and a very limited number of banks (9%) are found to disclose enough details about the zakat calculation method. Furthermore, none of the examined banks mentions the zakat due for the investment accounts. Overall, zakat disclosure of most of the banks, whether following Accounting and Auditing Organization for Islamic Financial Institutions or otherwise, are found to be not up to the expected best practices. Research limitations/implications Among the limitations of this study is the sole dependence on annual reports of Islamic banks without considering other means that banks might be using to communicate zakat-related matters to stakeholders. Examples of such means include a website, social media and other direct or indirect marketing materials. Additionally, the results of this study shall not be overgeneralized regarding differences between countries because the sample does not include all Islamic banks in the selected country. Future research may use the proposed zakat disclosure index on a country-specific data sample. Practical implications The findings have significant implications as they raise a serious concern regarding the sufficiency of the Islamic banks’ disclosure about a core area of their responsibility, that is, the zakat. The index developed can be a tentative measure of zakat disclosure transparency pending further review. The result further suggests looking at the composition of members of Shariah boards to include at least one member with a sound accounting background. Zakat is a religious duty; therefore, a perceived lack of transparency on the amount, method of calculation and how the zakat is paid may affect the future injection of capital into Islamic banks. Originality/value An important contribution of this paper lies in the fact that the collected data is not provided in any available database. Rather, it is manually captured from the individual annual reports of reviewed Islamic banks. Further, this paper proposes an index to measure the zakat disclosure at bank and country levels.

Determinant of corporate social responsibility in Islamic banking based on the Islamic social reporting index

Purpose - This study aims to determine the level of CSR comparison in sharia-compliant banking based on the Islamic Social Reporting Index indicators and analyze the factors influencing its disclosure.Method - This study is quantitative research using secondary data. Population of this study is 9 Islamic Banks in Indonesia in 2017-2021. The selection of samples in this study used purposive sampling. The data were analyzed using Panel Data regression analysis, Classic Assumption test, F-test, and T-test.Result - The results showed that two of the four variables thought to have an impact on ISR disclosure are found to have a significant impact. In contrast to leverage, which has a negative but considerable impact on ISR disclosure, company age has a positive and significant impact. The other two factors (profitability and company size) had less of an impact on ISR disclosure.Implication - Islamic Commercial Banks in Indonesia suggest to improve the financial performance in Corporate Social Responsibility with Isamic Social Reporting Index.Originality - This is a study to prove the effect of corporate social responsibility disclosure on the annual report of Islamic banks using the Islamic Social Reporting Index indicator.

Gender diversity, foreign directors and sector-wise corporate philanthropic giving of Islamic banks in Bangladesh

PurposeThis study aims to examine how board gender diversity and foreign directors influence the sector-wise corporate philanthropic giving (donation) of Islamic banks in Bangladesh.Design/methodology/approachUnbalanced panel data were extracted from the annual reports of Islamic banks in Bangladesh over 11 years, from 2010 to 2020.FindingsThe findings indicate that gender diversity significantly improves corporate philanthropic giving for the education sector but insignificantly influences corporate philanthropic giving for health and humanitarian and disaster relief sectors. In contrast, the results show that foreign directors significantly and positively affect the banks' corporate philanthropic giving for the three sectors.Research limitations/implicationsThis paper used only secondary data extracted from the annual reports of Islamic banks in Bangladesh between 2010 and 2020. Besides, only three sectors of corporate social responsibility activities were considered. Hence, the findings could not be generalized, as the study used only data from one country.Practical implicationsThe findings can be useful to policymakers and regulators to provide policies and regulations that ensure the appointment of women and foreign directors to boards that can competently promote Islamic banks' charitable donations.Social implicationsInducing Islamic banks to provide corporate donations for activities related to education, health and humanitarian and disaster relief can contribute directly to achieving sustainable development goals (SDGs) like SDG-3 (good health and well-being) and SDG-4 (quality education) and impliedly support attaining some indicators of SDG-1 (no poverty), SDG-2 (zero hunger) and SDG-10 (reduced inequality).Originality/valueThis study contributes to the literature by investigating how board gender diversity and foreign directors influence sector-wise corporate donations for the education, health and human and disaster relief sectors instead of aggregate donations studies concentrated by previous studies.

The Impact of COVID-19 on the Performance of Islamic Banks in the MENA Region

Purpose — This research explores the impact of COVID-19 on the financial return of Islamic banks (IBs) in nine countries located in the Middle East and North Africa (MENA) region. It also examines the determinants of IBs’ profitability during stable and uncertain periods, namely before and during the development of coronavirus. Design/Methodology/Approach — The financial data of this paper were collected from annual reports of IBs and the Orbis Bank Focus database over four years: 2018, 2019, 2020 and 2021. Descriptive statistics were used to examine the progress of IBs’ performance from 2018 to 2021. The t-test was employed in this research paper to compare the financial proxies of IBs, and the multiple regression model was used to assess the determinants of IBs’ performance before and during the development of coronavirus in MENA countries. Findings — The empirical findings show that IBs in MENA countries were dramatically influenced by the development of COVID-19. All financial proxies of IBs like financial return and liquidity experienced a sharp drop during the lockdown period. The empirical findings also indicate that the financial situation of IBs in 2021 became close to the pre-pandemic situation but was nonetheless below the banks’ performance prior to the pandemic period (2018-2019). Finally, the results show that the determinants of IBs’ return were not the same during stable and uncertain periods. During the COVID-19 period, credit risk, managerial efficiency and oil price were the significant determinants of IBs’ profitability. Before the development of COVID-19, besides the elements of credit risk, managerial efficiency and oil price, liquidity risk and bank size were also found to have an influence on IBs’ profitability. Originality/Value — The research offers new insights to top managers in IBs to increase the institutions’ financial return and mitigate the negative shock of crises by managing several factors such as credit risk and managerial efficiency. ErratumArticle classification: Erratum from: ISRA International Journal of Islamic Finance Vol. 15 No. 1 (2023)Publisher: ISRA Research Management Centre, INCEIF University El-Chaarani, H. (2023), ‘The Impact of COVID-19 on the Performance of Islamic Banks in the MENA Region’, ISRA International Journal of Islamic Finance, Vol. 15 No. 1, pp. 109–129. https://doi.org/10.55188/ijif.v15i1.488. It has been brought to our attention by the author that minor mistakes have been left out in the author’s details which appear on pages 109 and 129 of the article. The author would like to make the following corrections within his affiliation: The author’s affiliation on page 109 should instead read: ‘Beirut Arab University, Tripoli, Lebanon’. Under ABOUT THE AUTHOR on page 129, the author’s details should instead read: He is the Director of the Faculty of Business Administrationat Beirut Arab University, Tripoli, Lebanon. These have been corrected in the online version of the paper.Citation:(2023), ‘Erratum’, ISRA International Journal of Islamic Finance, Vol. 15 No. 1, https://doi.org/10.55188/ijif.v15i1.488

Board Characteristics and Intellectual Capital in Islamic Banks: Evidence from Indonesia, Malaysia and Bangladesh

This study aims to determine the effect of intellectual capital and board characteristics on Islamic banks in Indonesia, Malaysia, and Bangladesh. This study was quantitative were data collected from the annual report of Islamic banks in 2014 to 2019 in Indonesia, Malaysia, and Bangladesh. The data were analyzed using multiple linear regression. The result found that educational diversity and gender diversity have a significant effect on intellectual capital at Islamic banks in Indonesia, Malaysia, and Bangladesh, while the board size and the board meeting does not affect. The result may have a new perspective on the relationship between the characteristics of directors and intellectual capital in Asia, especially Indonesia, Malaysia, and Bangladesh. The application of intellectual capital can increase decision-making accuracy and problem-solving so that managerial functions can improve company performance by increasing the number of directors and gender diversity.

Corporate Governance, Karakteristik Dewan Pengawas Syariah dan Maqoshid Sharia Index pada Perbankan Syariah di Indonesia

<p class="bdabstract">This study aims to examine the effect of corporate governance and the characteristics of the Sharia Supervisory Board on the Maqoshid Sharia Index in Islamic Banking in Indonesia. In this study, corporate governance is proxied by the Board of Directors, Board of Independent Commissioners, Audit Committee, and Institutional Ownership. Meanwhile, characteristics of the DPS are proxied by the size of the DPS, Multiple Positions DPS and the DPS meeting. This study uses research data obtained from the annual reports of Islamic banks in Indonesia in 2015-2019. Technical analysis of data using regression with Common Effects Model after being selected using the Lagrange multiplier test. The study results found that the Independent Board of Commissioners, Institutional Ownership, and Multiple Positions DPS affected the Maqoshid Sharia Index. Meanwhile, the variables of the Board of Directors, the Audit Committee, the size of the DPS, and the DPS meeting have no effect on the Maqoshid Sharia Index in Islamic Banking in Indonesia.</p><p class="bdabstract"><strong>Keywords: </strong>Corporate governance; Characteristics of the sharia supervisory board; Maqosid Sharia Index; Islamic bank; Indonesia</p>

Analisis Hubungan CAR dan SIZE Terhadap FDR dan Pengaruhnya Terhadap Kinerja Perbankan Syariah di Indonesia

This study aims to determine the effect of the CAR and Firm Size variables on bank liquidity as measured by ROA and determine the effect of FDR on the financial performance of Islamic banks as measured by ROA in Islamic banking in Indonesia for the 2015-2019 period. In this study, the data sample used was selected through a purposive sampling method with data taken from secondary data, namely the annual report of Islamic banks for the 2015-2019 period and the sample in this study used 11 Islamic Commercial Banks. This study uses the method of Descriptive Analysis and Path Analysis using the Eviews 9 and WarpPLS 7.0 applications as analytical tools. The results of this study are CAR has no effect on FDR, Firm Size has a negative and significant effect on FDR and FDR has a positive and significant effect on ROA.

Influence of Corporate Governance On Profit of Islamic Banks in Indonesia Period 2016-2020

Profitability in Islamic banks is one of the most critical elements. Meanwhile, corporate governance becomes the central aspect of Islamic banks in the company's internal management, including the quality of financial statements that have implications for profitability. The small proportion of independent boards of commissioners, audit committees, and board of directors leads to a potential decrease in profits at Islamic banks in Indonesia. This phenomenon is caused by the management of companies, including Islamic banks, less responding to the situation. The independent variables of this research are the proportion of separate boards of commissioners, audit committees, and boards of directors. At the same time, the dependent variable is profit. The data used in secondary data is the annual report of Islamic banks in Indonesia in 2016-2020. The analysis method uses multiple regression analysis of panel data. This study showed that the audit committee affected profits while the proportion of independent boards of commissioners and directors did not affect profits.

Corporate social responsibility disclosure and Islamic banks: a case study of Pakistan

PurposeThis paper aims to gauge the level of corporate social responsibility (CSR) disclosure of Islamic banks of Pakistan.Design/methodology/approachThe annual reports of Islamic banks of Pakistan from the year 2003 to 2017 were considered as the source of data. The content analysis method was used to gauge the level of CSR disclosure with the help of the CSR disclosure index. Islamic banks proclaim religiously motivated and ethical institutions; hence, full disclosure was expected from Islamic banks in the domain of CSR.FindingsThe average level of CSR disclosure of Islamic banks after a one-and-a-half decade of Islamic banking in Pakistan is 31.23%, which is far below the expected level of CSR disclosure and even below the mean level. The mean comparison analyzes show that the level of CSR disclosure differs among the Islamic banks, old and large Islamic banks are disclosing more information, in addition, the local Islamic banks have a relatively high level of CSR disclosure as compare to the foreign Islamic banks.Research limitations/implicationsThe current CSR disclosure policy of the government regarding corporations in Pakistan is insufficient. There is a need to revise this policy which may result in higher CSR disclosure. The results indicate, that there is a difference in CSR disclosure among local and foreign Islamic banks, so this policy must address this aspect as well.Originality/valueIslamic banking proclaims a new wave of the corporate that has higher social objectives, but a contradiction exists among the ideology and reality of social responsibility of Islamic banks. Then, this study also supports that the same dilemma of low CSR disclosure also prevails in the Islamic banks of Pakistan.

Shariah Disclosure Practices in Malaysian Islamic Banks using the Shariah Disclosure Index

Islamic banks are required to ensure their operations and activities comply with the Shariah principles. According to Islamic Financial Services Act (2013) in Malaysia, all operations and activities of Islamic financial institutions including Islamic banks have to comply with decisions made by the Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM) and the Shariah Committee (SC) of the Islamic financial institution to ensure Shariah compliance. In practice, Shariah compliance is considered a crucial factor by bank stakeholders, especially Muslim customers in their decision to use Islamic financial products. Thus, one of the ways for Islamic banks to convey their Shariah-compliance to their stakeholders is through annual reports. This study examines the level of compliance on Shariah disclosure in the annual reports of Malaysian Islamic banks. A Shariah disclosure index, comprising mandatory and voluntary items, was developed from Bank Negara Malaysia (BNM) guidelines and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards. Shariah disclosure data were collected from the annual reports for the year 2016 of the 16 Islamic banks in Malaysia. Based on Institutional Theory, this study hypothesised high compliance, however the results revealed that none of the banks had full compliance to the mandatory items. Nevertheless, some of these banks disclosed voluntary items. The findings provide useful insights to the regulators and stakeholders on Islamic banks’ compliance on Shariah disclosure. The study also reveals the importance of disclosing additional items in the annual reports of Islamic banks.

THE INFULENCE OF FINANCIAL CONDITIONS AND SHARIA SUPERVISORY BOARD TOWARD CORPORATE TAXPAYER COMPLIANCE

The purpose of this research is to determine whether the financial condition and sharia supervisory board have a significant influence on the compliance of corporate taxpayers either partially or simultaneously. The samples are selected by purposive sampling method so that 9 sharia commercial bank samples are obtained. The unit of analysis in the study amounted to 45 annual reports of Islamic banks. The type of quantitative data is in the form of financial reports (annual reports) of each bank from 2014- 2018. The results of this study find that financial conditions affect the compliance of corporate taxpayers, indicated the better financial condition, the greater the profits obtained, the better the compliance of corporate taxpayers. Sharia Supervisory Board affects the compliance of corporate taxpayers, it is indicated that the better the one in supervising a bank, the better and obedient the company is in compliance with corporate taxpayers.

PENGARUH PENERAPAN GOOD CORPORATE GOVERNANCE TERHADAP PROFITABILITAS PADA BANK UMUM SYARIAH PERIODE 2014-2018

The application of Good Corporate Governance (GCG) is the way to control a corporate professionally and transparently to reach goals agreed by both shareholders and stakeholders. So, it is expected Islamic banks can perform with a good quality and consistently implementing GCG mechanism along with increasing profits. Therefore, this research focused on appraising profitability increasing with Return on Asset (ROA) and Return on Equity (ROE) as indicator, together with appraising GCG with self assessment reports based on 11 criteria of composite rate valuation. This research used quantitative method from GCG reports and annual report of Islamic Banks from 2014-2018 period, as secondary data. The result was GCG as independent variable positively and significantly effecting ROA and ROE.

Apakah Manajemen Laba di Bank Syariah Berbeda dengan Bank Konvensional?

This research is in the form of quantitative correlation. The correlation method is a research method with the aim of describing two or more facts and also the properties of the object being studied. This study aims to determine the differences in earnings management in Islamic banks with earnings management in conventional banks registered with the Financial Services Authority from 2015-2019. The data used in this study are the annual reports of Islamic banks and conventional banks registered with the Financial Services Authority for the period 2015-2019. The data sampling method uses purposive sampling method based on certain criteria. Based on the criteria used, the researcher obtained a sample of 34 banks. Testing the hypothesis in this study using multiple regression analysis and coupled with a different test (independent sample t-test). The results showed that there is a difference between earnings management in Islamic banks and conventional banks. Earnings management in Islamic banks is lower than conventional banks. Keywords: Conventional bank, Islamic bank, Earnings management.

Ethical disclosure in the Shari’ah annual reports of Islamic banks: discourse on Shari’ah governance, quantitative empirics and qualitative analysis

PurposeAs an essential component of Islamic governance for ensuring religious compliance, Shari’ah annual reports (SARs) play an important role in providing communication between Shari’ah board (SB) members and stakeholders. This paper aims to determine the ethical disclosure in SARs to identify how close the Shari’ah disclosure to the standards set by AAOIFI and also substantive morality of Islam. The research also aims to examine the factors determining disclosure performance.Design/methodology/approachTwo disclosure indices are developed to generate data from the SARs: the AAOIFI standards for Shari’ah governance index for form related approach, an Islamic ethicality augmented index reflecting on substantive morality approach. The sample consists of 41 Islamic banks from 15 different countries for the period of 2007–2014. Sampled 305 SARs were examined through disclosure analysis in line with the two indices developed for this study. The econometric analysis was run to identify the factors determining disclosure performance.FindingsThe findings suggest that AAOIFI guidelines have an influence on the level of disclosure, even if Islamic banks have not adopted them. However, the level of disclosure for the ethically augmented index is found to be very limited with reliance on general statements in most of the cases. As part of determining factors, the popularity of Shari’ah scholars is significant for both indices, while the existence of an internal Shari’ah auditing department holds some explanatory power. The adoption of AAOIFI standards at the country level, the regulatory quality and the duration of Sharīʿah-compliance are particularly deterministic factors in terms of complying with AAOIFI standards for SARs.Originality/valueAlthough SB is the most crucial division of corporate governance in Islamic banks in terms of securing the “Islamic” identity of these institutions, their most important communication instrument, namely, SAR, has not been explored sufficiently, alongside an insufficient attempt to constitute Islamic corporate governance. Initially, this study attempted to constitute an Islamic corporate governance framework as a theoretical construct, which provides context for the empirical part of the research and this should be considered a novel approach. Second, the empirical part of the research aims to fill the gap observed in the literature such as small sample size and index construction-related matters. This research is conducted with a larger sample size as compared to the available studies in the literature and it has developed two indices for disclosure analysis along with developing an Islamic morality-based index beside an index based on AAOIFI standards.

THE INVESTMENT ACCOUNT HOLDERS DISCLOSURE LEVEL IN THE ANNUAL REPORTS OF ISLAMIC BANKS: CONSTRUCTION OF IAHS DISCLOSURE INDEX

This paper aims to measure the IAHs disclosure level in the annual reports of Islamic banks. To do this, we develop a specific IAHs disclosure index based on Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards. We use manual content analysis of 49 full-fledged Islamic banks’ annual reports over the period 2011–2015 across 10 countries. The findings of this study show that the overall level of IAHs disclosure is 28%. Indeed, the sampled Islamic banks provide fewer disclosures related to IAHs. This study contributes to enrich the knowledge of Islamic accounting literature by exploring directly the IAHs disclosure level in the annual reports of Islamic banks via self-constructed IAHs disclosure index based on AAOIFI accounting standards. It can help regulators in different countries to understand and strengthen the IAHs disclosure practices in Islamic banks by imposing AAOIFI disclosure requirements in terms of IAHs reporting.

Determinants of Islamic social reporting in Islamic banks of Pakistan

Purpose This study aims to spotlight and explore various determinants of Islamic social reporting (ISR) in Islamic banks of Pakistan. Design/methodology/approach The authors have used firm size, firm profitability, firm age, board size and board independence as determinants of ISR. The authors collected data from Islamic banks listed on Pakistan Stock Exchange for the period 2012–2019. Multiple estimation techniques, i.e. fixed effect model, random effect model and one-step difference generalized method of moment (GMM), have been applied. Findings Random effect model was found to be more robust as compared to fixed effect model and one-step difference GMM. The results reported by the random effect model, preferred among the three, show that firm size, firm profitability, firm age and board size are important determinants of ISR in Islamic banks of Pakistan, while board independence does not determine social reporting for Islamic banks in Pakistan. Although social reporting in annual reports of Islamic banks in Pakistan is increasing, further improvement and compliance is required to ensure accountability and transparency in financial reporting as recommended by Islamic teachings. The study has certain managerial implications, especially for top management of Islamic banks. Originality/value To the best of the authors’ knowledge, this study is the first to discuss determinants of ISR in Islamic banks of Pakistan. The developed framework herein provides a precise guideline for Islamic banking to enhance their performance, which has never been discussed before.

The Effect of Corporate Governance Mechanisms, Capital Structure and Firm Size on Risk Management Disclosure

This study aims to determine the effect of the duties and responsibilities of directors, institutional ownership, managerial ownership, capital structure and firm size on RMD in an Islamic banks. The population in this study is the Islamic Banks in Indonesia. There is 35 annual reports of Islamic banks as samples. The analytical method used is multiple linear regression analysis using SPSS tool. The results showed that the firm size significant positive effect on RMD. While the other variables are the duties and responsibilities of directors, institutional ownership, managerial ownership and capital structure does not affect the RMD. Researchers further advised to analyze other factors that may affect the RMD on Islamic banks such as the duties and responsibilities of the board of commissioners. 
 Keywords: Risk Management Disclosure (RMD), Mechanism Corporate Governance, Duties and Responsibilities of Directors, Institution Ownership, Management Ownership, Capital Structure, Firm Size.

The Effect of the Sharia Supervisory Board Characteristics on Maqashid Sharia Index

The purpose of this study is to obtain empirical evidence regarding the influence of the characteristics of the Sharia Supervisory Board on the maqashid sharia index on sharia banks in Indonesia. The variables used in this study are the characteristics of the sharia supervisory board and maqashid sharia index. The characteristics of sharia supervisory boards are the educational background of sharia supervisory boards, number of sharia supervisory board meetings, concurrent positions of sharia supervisory boards, and indicators of the number of sharia supervisory boards. The maqashid sharia index uses indicators of welfare (maal), education (tahdzib al fard), and justice ('adl). The data used are secondary data in the form of annual reports of Islamic banks in Indonesia for a 5 years period (2013-2017). The research sample of eleven Islamic banks. Data analysis technique used is Partial Least Square (PLS). The findings of the study were successful in proving the negative influence of the number and educational background of the sharia supervisory board on the maqashid sharia index.