Do corporate governance implementation and bank characteristics improve the performance of Indonesian Islamic banking? Before-COVID-19 pandemic analysis

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Islamic banking has existed in Indonesia since 1992. The performance of Islamic banking is interesting for further analysis. This study aims to analyze the impact of good corporate governance (GCG) implementation and bank characteristics on the performance of Islamic banking in Indonesia before the COVID-19 pandemic. Profitability is a measure of banking performance and is proxied by return on assets (ROA) and return on equity (ROE). The research sample consists of Islamic commercial banks that published financial and annual reports between 2011 and 2019. The data collection method used is documentation. Multiple regression analysis was used for data analysis. The results indicate that the implementation of GCG has no significant impact on performance (probability values of 0.425 and 0.420 on ROA and ROE with coefficients of 0.016 and 0.019). The P-value of the non-performing loans (NPF) variable is < 0.001 on ROA and ROE, which means that NPF has a significant negative impact on ROA and ROE. Third-party funds only have a significant impact on ROE with a p-value of 0.046. Meanwhile, the size of a bank has not been shown to have a significant impact on the performance of Islamic banking in Indonesia. Efforts to maintain NPF are critical for banks to achieve good performance (profitability). NPF demonstrates the risk of nonpayment of Islamic bank financing.

Acknowledgment
We gratefully acknowledge the research funding provided by LPPM Universitas Negeri Semarang (contract number: 19.8.3/UN37/PPK.3.1/2022).

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    • Table 1. GCG self-assessment indicators in Islamic banking
    • Table 2. Composite rating of GCG self-assessment implementation results
    • Table 3. Descriptive statistics
    • Table 4. Performance and implementation of GCG in Indonesian Islamic banking before the pandemic (2011–2019)
    • Table 5. Hypotheses testing results
    • Conceptualization
      Ahmad Nurkhin, Kusmuriyanto, Widiyanto Widiyanto
    • Data curation
      Ahmad Nurkhin, Anna Kania Widiatami, Ida Nur Aeni
    • Formal Analysis
      Ahmad Nurkhin, Anna Kania Widiatami
    • Funding acquisition
      Ahmad Nurkhin, Kusmuriyanto, Widiyanto Widiyanto
    • Investigation
      Ahmad Nurkhin, Anna Kania Widiatami, Ida Nur Aeni
    • Methodology
      Ahmad Nurkhin, Widiyanto Widiyanto, Ida Nur Aeni
    • Software
      Ahmad Nurkhin, Anna Kania Widiatami, Ida Nur Aeni
    • Visualization
      Ahmad Nurkhin, Widiyanto Widiyanto
    • Writing – original draft
      Ahmad Nurkhin, Anna Kania Widiatami, Ida Nur Aeni
    • Writing – review & editing
      Ahmad Nurkhin, Anna Kania Widiatami, Ida Nur Aeni
    • Supervision
      Kusmuriyanto, Widiyanto Widiyanto
    • Validation
      Kusmuriyanto, Widiyanto Widiyanto
    • Project administration
      Anna Kania Widiatami, Ida Nur Aeni
    • Resources
      Anna Kania Widiatami, Ida Nur Aeni