Issue #2 (Volume 20 2025)

This study analyzes the effects of environmental, social, and governance (ESG) controversies and the presence of women on boards on ESG-washing practices in the global banking sector. ESG washing is a manipulative practice in ESG disclosure where companies highlight positive information to conceal poor sustainability performance. This study employs a panel dataset from 279 public banks in 67 countries, covering five major regions – Asia, Europe, Africa, America, and Oceania – over the period 2011 to 2023. Data were obtained from Refinitiv Eikon and Bloomberg for bank-level information, as well as the World Bank for macroeconomic data. The results show that ESG controversies significantly drive ESG washing. Banks involved in controversies tend to use manipulative ESG disclosures to protect their reputation and mitigate the impact of scandals. Conversely, the presence of women on the board has a significant mitigating effect on ESG washing. This study also identifies a critical mass effect, where the positive influence of women on boards in reducing ESG washing becomes optimal when their representation reaches a certain level. These findings have important implications for policymakers and regulators to promote inclusive governance and sustainability transparency, particularly through increasing gender diversity on boards of directors. Furthermore, these results indicate that good governance, supported by adequate representation of women, can help combat unethical practices such as ESG washing in the global banking sector.

Dispute resolution in Islamic banking presents unique legal and procedural challenges due to the dual requirement of compliance with national laws and Islamic Sharia principles. This study aims to evaluate the legal and practical effectiveness of arbitration in resolving Islamic banking disputes, particularly in terms of efficiency, compliance with Sharia, and institutional trust. A qualitative approach was employed, based on semi-structured interviews with 12 domain experts, including Islamic banking professionals, arbitrators, legal advisors, and Sharia scholars, each with 10–25 years of experience in relevant fields.
The findings indicate that 83% of respondents (10 out of 12) believe arbitration is more efficient than litigation in Islamic banking disputes, particularly in terms of speed and confidentiality. 75% of participants identified the lack of codified Sharia-compliant arbitration frameworks as a major limitation to broader adoption. Meanwhile, 67% emphasized the absence of a unified Sharia Supervisory Board as a critical institutional gap affecting arbitration legitimacy. Furthermore, 58% of experts pointed to weak trust in arbitration outcomes among financial institutions as the key reason arbitration clauses are often excluded from contracts.
Despite these barriers, 92% of respondents agreed that arbitration has high potential to resolve Islamic banking disputes effectively if institutional and legislative reforms are implemented. The study recommends establishing standardized arbitration protocols, enhancing regulatory oversight, and developing Sharia-aligned legal infrastructure.
These insights contribute to the broader discourse on Islamic finance governance and offer practical recommendations for policymakers, arbitration centers, and financial institutions seeking to enhance dispute resolution mechanisms in line with Sharia principles.

Acknowledgment
The authors are thankful to the Deanship of Graduate Studies and Scientific Research at the University of Bisha for supporting this work through the Fast-Track Research Support Program.

The COVID-19 pandemic has affected bank lending growth to the point of decreasing banking profitability. Therefore, this study aims to analyze the differences in the performance of conventional banks and Islamic banks before and after the COVID-19 pandemic in Indonesia. This study uses secondary data with a quantitative approach. The performance is measured using four financial ratios: CAR, ROA, LDR or FDR, and BOPO. The population in this study is conventional banking and Islamic banking in Indonesia. The observation period for this study starts from pre-COVID-19 in June 2016 to March 2019 and post-COVID-19 from March 2020 to June 2023. The hypotheses were tested using the paired T-test and the one-sample Kolmogorov-Smirnov test for normally distributed data. The results of the one-sample Kolmogorov-Smirnov test on conventional banks show that whether there is a distinction between the performance of conventional banks and Islamic banks before and after the COVID-19 pandemic in Indonesia. The results of the graphic investigation indicate that there are financial ratios that have experienced an increase in performance, to be specific the CAR, ROA, and BOPO proportions, whereas the FDR or LDR tend to encounter a decrease in performance after COVID-19. There was an increase and decrease between before and after the outbreak of the COVID-19 pandemic in each proportion, which is still in the category with healthy and good banking qualification.

Acknowledgment
The substantial financial support for this study through the HIT funding scheme, provided by the Research and Innovation Institute (LRI) of Universitas Muhammadiyah Surakarta, is greatly appreciated by the authors.

This study examines the important but underexplored link between liquidity levels and profitability in commercial banks in Cambodia, a topic of great relevance for both bank managers and policymakers seeking to bolster financial stability. By analyzing data spanning 12 years (2011 to 2022) from 22 banks, the study applies a variety of panel data models, such as pooled ordinary least squares (OLS), fixed effects (FE), random effects (RE), and the one-step generalized method of moments (GMM). The findings reveal a statistically significant negative impact of liquidity on profitability across all static panel data models, with coefficients of –1.3005 (pooled OLS), –0.9786 (FE), and –0.9966 (RE), each statistically significant at varying levels. The dynamic panel data model (one-step GMM) further confirmed this negative relationship, showing a coefficient of –0.3588. It also highlighted a robust positive effect of lagged profitability, with a coefficient of 0.7491. Interestingly, the study found that only bank-specific factors, such as operating expenses and net interest margin, consistently influenced profitability across both static and dynamic panel models. On the other hand, macroeconomic factors like inflation were shown to negatively affect profitability, underscoring the need for sound bank management practices and well-designed regulatory policies.

Acknowledgments
We sincerely appreciate the financial support from the management of CamEd Business School, which made it possible for us to submit this paper for publication.

This study investigates the key factors influencing the probability of bankruptcy among rural banks in Indonesia, concentrating on internal, industry-specific, and external factors. The study analyzes 1,391 conventional rural banks in Indonesia from 2019 to 2023, resulting in 6,919 bank-year observations. This study uses financial and regional macroeconomic data and applies a population-averaged logistic regression model on a balanced panel dataset. The results indicate that internal factors play a significant role in determining the probability of bankruptcy. In contrast, industry characteristics, which are competition and regulation, and external factors, such as economic growth, do not exhibit a substantial impact. Rural banks characterized by inadequate capital and low profitability are at a heightened risk of insolvency, exacerbated by a significant proportion of non-performing loans. Excessive liquidity paradoxically leads to insolvency, as it indicates the presence of underutilized assets, increasing the chance of failure. These findings confirm that policies encouraging underperforming rural banks to merge with solid rural banks are suitable. These strategies promote a more robust rural banking ecosystem and effective regulatory control by decreasing the number of rural banks.

Acknowledgment
This research was funded by Hibah BIMA Kemendikburistek, grant number 0008/LPPM/UP/VI/2024.