scholarly journals Do the Characteristics of Internal Audits and Compliance Functions Affect Sharia Compliance?

2020 ◽  
Vol 35 (2) ◽  
pp. 97
Author(s):  
Laili Latifah Puspitasari ◽  
Wuri Handayani
Keyword(s):  
Research Method ◽  
Supervisory Board ◽  
Internal Audit ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Compliance Function ◽  
Analysis Technique ◽  
The Relationship ◽  
Positive Effect

Introduction: This study aims to explore the relationship between the characteristics of an internal audit (IA) and a compliance function (CF) toward sharia compliance. Background Problems: The Sharia Supervisory Board (SSB), which is supposed to guarantee sharia compliance in Islamic banking, does not function properly. Consequently, the SSB delegates this supervision to the banks’ employees, so the compliance function and internal audit become common practices used to address any issues. Novelty: The majority of previous studies have examined the role/characteristics of the SSB in sharia compliance. On the other hand, few studies have examined the role/characteristics of IA and CF in sharia compliance. Therefore, this study was conducted to examine the characteristics of IA and CF toward sharia compliance. Research Method: The study utilized the seven Islamic banks in Indonesia which published their annual reports for the period from 2011 to 2018 as its research sample. The analysis technique used in this study is a multiple regression analysis. Results: The results indicated that IA and CF competencies had a positive effect toward the sharia compliance of Islamic banks in Indonesia. Conclusion: It is necessary to enhance the competencies of IA and CF staff through improving their professional qualifications, such as through education programs, certification and relevant training on the scope of sharia supervision. Such actions need to be done to support IA and CF staff in performing the comprehensive supervision of sharia compliance.

scholarly journals The effect of profitability, size and Shariah supervisory board of an Indonesian Islamic bank on the Islamic social reporting disclosure

2021 ◽  
Vol 16 (3) ◽  
pp. 84-92
Author(s):  
Fachrurrozie ◽  
Ahmad Nurkhin ◽  
Agus Wahyudin ◽  
Al Mamnukhin Kholid ◽  
Ika Agustina
Keyword(s):  
Commercial Banks ◽  
Supervisory Board ◽  
Social Reporting ◽  
Annual Reports ◽  
Islamic Banks ◽  
Islamic Bank ◽  
High Level ◽  
The Relationship ◽  
Positive Effect

This paper analyzes the effect of profitability and size of Indonesian Islamic banks on the level of Islamic Social Reporting (ISR) disclosure. This study also investigates the role played by the Sharia Supervisory Board (SSB) in the effect of profitability and size of an Islamic bank on ISR disclosure. The presence of SSB is very important in the operations of Islamic banks. SSB should be involved in important company decisions, including the ISR disclosure. The study covers all 14 Indonesian Islamic commercial banks as a population; the analysis will be conducted based on annual reports of the banks’ divisions for the period 2014–2018. A documentation technique was used to collect the data. Moderated Regression Analysis (MRA) was used for data analysis. The results show that the adjusted R-squared coefficient of the equation is 0.341. R-squared contributions of ROA, ROE, size, and SSB are –0.093, 0.010, 0.983, and –0.081. Other results show that profitability (ROA) and size (total assets) significantly affect the level of ISR disclosure among Indonesian Islamic banks. However, the results were indifferent regarding the role of SSB. There is no significant effect of SSB on ISR disclosure. SSB was important for moderating the relationship between profitability (ROA and ROE) and bank size and ISR disclosure level. SSB’s involvement in the decision making of Islamic banks will have a positive effect on the activities of Islamic banks. Islamic banks will tend to have a high level of ISR. Further researchers can develop SSB measurements for more accurate results.

scholarly journals A META-ANALYSIS OF THE DETERMINANT OF THIRD PARTY FUND ON ISLAMIC BANKING IN INDONESIA

2020 ◽  
Vol 6 (2) ◽  
pp. 175
Author(s):  
Diyas Indiastary ◽  
Noven Suprayogi ◽  
Imam Wahyudi Indrawan
Keyword(s):  
Interest Rate ◽  
Time Variation ◽  
Meta Analysis ◽  
Third Party ◽  
Google Scholar ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Analysis Technique ◽  
Equivalent Rate ◽  
The Relationship

This research attempts to study the determinants of third party funds on the Islamic banking in Indonesia with eight years of research from published journals in Indonesia. To reach the above objectives, investigation to check the relationship between promotion cost, inflation, GDP, interest rate, number of offices, and equivalent rate to third party funds on the Islamic banking in Indonesia is conducted. This research applies the meta-analysis technique to a sample of 34 articles with time variation from 2010-2018. The articles used are selected studies from Sinta Journal and Google Scholar databases. This research shows that promotion cost, number of offices, and equivalent rate have a significant correlation with third party funds on the Islamic banking in Indonesia. Meanwhile, inflation, GDP, and interest rate have no significant correlation with third party funds on the Islamic banking in Indonesia. The Findings from this study imply that if Islamic banks in Indonesia wish to enhance their third party fund, they must focus on internal indicators (promotion cost, number of offices, and equivalent rate), rather than looking at macro indicators.

Can Shariah board characteristics influence risk-taking behavior of Islamic banks?

2019 ◽  
Vol 12 (4) ◽  
pp. 469-488 ◽  
Author(s):  
Amal AlAbbad ◽  
M. Kabir Hassan ◽  
Irum Saba
Keyword(s):  
Risk Taking ◽  
Supervisory Board ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Asset Return ◽  
Board Characteristics ◽  
The Relationship ◽  
Risk Taking Behaviors ◽  
Practical Implications

Purpose The purpose of this paper is to study whether the characteristics of the Shariah Supervisory Board (SSB) can influence the risk-taking behaviors of Islamic banks. Design/methodology/approach The data on governance were collected from 70 Islamic banks’ annual reports across 18 countries for the period from 2000 to 2011 to investigate the relationship between SSB’s characteristics including size, busyness and foreign board and the Islamic banks’ risk activities. Findings The size of SSB and the proportion of busy board in SSB positively and significantly influence Islamic banks’ asset return and insolvency risks. Foreign members are more effective in monitoring banks’ Shariah compliance. Further analysis provides some evidence that most of the findings on the associations between the SSB structure and bank risk are derived from countries in the Gulf Cooperation Council where Shariah governance is ruled internally at the bank level. Practical implications There is a need for better Shariah board characteristics in place that complement with other governance mechanisms to well comprehend the main purpose of Islamic banks. Originality/value SSB board busyness and foreign characteristics appear to influence the risk-taking behaviors of Islamic banks.

Efisiensi dan Kinerja Perbankan Syariah di Indonesia

2019 ◽  
Vol 2 (2) ◽  
pp. 114-123
Author(s):  
Multazam Mansyur Addury
Keyword(s):  
Market Share ◽  
Commercial Banks ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Moderator Variable ◽  
Panel Data Regression ◽  
Analysis Technique ◽  
Data Regression ◽  
Efficiency Performance ◽  
The Relationship

Abstract - This study aims to analyze the effect of efficiency on the performance of Islamic banking by using market share as a moderator variable. The data  which are used in this study are 7 Sharia Commercial Banks in the annual form from the period of 2014 to 2018. The data analysis technique uses is the analysis of panel data regression. The results of this research prove that, first, the efficiency of Islamic banking has a significant influence on the performance of Islamic banking. Second, the market share of Islamic banks has no significant impact in moderating the relationship between the efficiency and the performance of Islamic banks. Keywords: Efficiency, Performance, Market Share, Islamic Banks

scholarly journals Corporate Governance and Risk Disclosures: A Comparative Analysis Between Bangladeshi and Malaysian Islamic Banks

2019 ◽  
Vol 10 (5) ◽  
pp. 110
Author(s):  
Mohammad Rokibul Kabir ◽  
Farid A. Sobhani ◽  
Normah Omar ◽  
Norazida Mohamad
Keyword(s):  
Corporate Governance ◽  
Profit Sharing ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Risk Disclosure ◽  
Corporate Governance Mechanisms ◽  
Analysis Technique ◽  
Risk Disclosures

Corporate governance provides a fundamental framework to oversee corporate conduct and ensures transparency of institutions like banks. In case of Islamic banks, it adds additional importance as the profit sharing (with the depositors) system enhances the chance of agency problem for such institutions. Again, risks are inherent in institutions like Islamic banks, which necessitate the investors to get proper information about the risk encountered by the banks in which they invest. Thus, corporate governance and risk disclosures bear utmost importance. Since Malaysian banking industry has already experienced a favorable growth of Islamic banking and Bangladesh is observing a rapid growth of popularity of Islamic banking, a comparative study has been undertaken between Malaysian and Bangladeshi Islamic banks regarding corporate governance and risk disclosures in annual reports. Content analysis technique has been applied to facilitate the comparison. Both quantity and quality of risk reporting of the sample companies have been evaluated. A corporate governance disclosure index has been developed by following the guidelines provided by Bangladesh Security and Exchange Commission (BSEC) and the principles laid down in the ‘Guidelines on Corporate Governance for Licensed Islamic Banks in Malaysia’ to explore and compare the degree of good corporate governance and relevant disclosures in the annual reports. It is hypothesized that corporate governance and risk disclosure will vary between Malaysian and Bangladeshi Islamic Banks. It is also argued that the corporate risk disclosures will be positively associated with the quality of the firm’s corporate governance mechanisms. Results are generally supportive of hypotheses. At the end, implications for theory and practices are discussed in the study.

scholarly journals Are characteristics of sharia supervisory boards able to improve the performance of islamic banking?

2019 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Ratna Fitriana ◽  
Agung Yulianto ◽  
Badingatus Solikhah
Keyword(s):  
Financial Performance ◽  
Linear Regression Analysis ◽  
Supervisory Board ◽  
Multiple Linear Regression Analysis ◽  
Profit Sharing ◽  
Islamic Banking ◽  
Supervisory Boards ◽  
Relationship Of ◽  
The Relationship ◽  
Positive Effect

<p><strong>Purpose</strong> - The purpose of this study was to examine the effect of characteristics of Sharia Supervisory Board (DPS) such as DPS scientific background, dual positions of DPS, and the number of supervision days on the performance of Islamic banking. This paper also analyze profit sharing financing as an intervening variabl</p><p><strong>Method</strong> - The population of this study is Islamic Banks in Indonesia in 2012-2017 are 13 sharia bank. The selection of samples in this study using purposive sampling method and selected 8 banks. The data was analyzed using multiple linear regression analysis, path analysis, and sobel test.</p><p><strong>Result</strong> - The results showed that the number of DPS supervision days has a positive effect on the Sharia financial performance, multiple positions of DPS have a positive effect on profit sharing financing. The profit sharing financing is not able to mediate the relationship of the characteristics of the Sharia Supervisory Board to the Sharia financial performance.</p><p><strong>Implication</strong> - Islamic Commercial Banks in Indonesia suggest to improve the financial performance in accordance with sharia principles.</p><p><strong>Originality</strong> - This research is the first study that used intervening variable profit sharing financing.</p>

scholarly journals URGENSI PENERAPAN KEPATUHAN SYARIAH PADA PERBANKAN SYARIAH (Telaah Konseptual-Analitis)

2017 ◽  
Vol 2 (1) ◽  
pp. 100-120
Author(s):  
Wulpiah Wulpiah
Keyword(s):  
Corporate Culture ◽  
Supervisory Board ◽  
Internal Audit ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Economic Activities ◽  
Islamic Financial Institutions ◽  
Rules And Principles ◽  
Operational Activities ◽  
The Impact

The issue of shariah compliance is increasingly important, given that Islamic finance is always challenged by demand from market participants to be innovative and business oriented (eg. offering new instruments and products), as conventional financial does. This fact can encourage the Islamic financial position further improve. On the one hand they should accommodate the demand of customers that may be contrary to shariah principles, but on the other hand Islamic banks are strictly bound by shariah compliance. This paper will focus on the importance of applying aspects of shariah compliance in Islamic banking.In various opinions, the meaning of shariah compliance in Islamic banks is “the application of Islamic principles, shariah and traditions in financial transactions and banking and other related business”. Shariah is one of the indicators of Islamic disclosure to ensure the adherence of Islamic banks to shariah principles. Furthermore, at the operational level, shariah compliance is compliance to the Dewan Syariah Nasional which is the embodiment of shariah principles and rules that must be adhered in Islamic banking.Some provisions that can be used to assess shariah compliance within Islamic financial institutions are: First, contract used for the collection and distribution of funds in accordance with the priciples of shariah and the rules of shariah. Second, Zakat funds is calculated and paid, managed in accordance with the rules and principles of shariah. Third, All transactions and economic activities are reported fairy in accordance with applicable shariah accounting standards. Fourth, the work environment and corporate culture in accordance with shariah. Fift, business that are financed do not conflict with shariah. Sixthly, there is Shariah Supervisory Board (DPS) as a shariah director for the overall operational activities of Islamic banks. Seventh, the source of funds comes from a legitimate and lawful source according to shariah.Related to the implementation mechanisme of shariah compliance, there are two underlying concept both in the context of the fulfillment of accuntability horizontally and transcendental. First, The concept of shariah review must be done by DPS to conduct supervision on shariah compliance. Second, the concept of shariah internal review, Islamic banking as one of internal audit function. If the optimazation of the implementation of shariah compliance aspect in Islamic banking is a necessity, so that the impact of Islamic bank can be the only option for the society to save and do the financing.

scholarly journals The relationship between zakat disclosures and Islamic banking performance: Evidence from Yemen

2021 ◽  
Vol 16 (1) ◽  
pp. 52-61
Author(s):  
Eissa A. Al-Homaidi ◽  
Ebrahim Mohammed Al-Matari ◽  
Suhaib Anagreh ◽  
Mosab I. Tabash ◽  
Nabil Ahmed Mareai Senan
Keyword(s):  
Descriptive Analysis ◽  
Secondary Data ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Islamic Financial Institutions ◽  
The Relationship ◽  
Positive Effect

This paper aims to analyze the link between the disclosure of zakat information and the performance of Islamic financial institutions in Yemen. Panel data of three Islamic banks working in Yemen were used. The study used a 16-item disclosure index to measure zakat disclosure information, and the financial performance of banks was calculated using two proxies, such as return on assets (ROA) and return on equity (ROE). Based on secondary data, this study used correlation matrix, descriptive analysis and regression analysis. ROA results revealed that zakat data and the age of a bank significantly affected financial results calculated by ROA, while the size of Islamic banks had an insignificant influence of banking performance. Zakat information and the size of Islamic banks have a positive effect on bank performance, while the age of the bank negatively influences the performance of banks. The results concerning ROE indicated that zakat data and the age of a bank have a strong and significant influence on the performance of banks, determined by ROA, while the size of a bank has a negative and insignificant effect on the performance of banks, determined by ROE.

Corporate governance, SSB strength and the use of internal audit function by Islamic banks

2020 ◽  
Vol 11 (1) ◽  
pp. 152-167
Author(s):  
Saed Ahmed Sulub ◽  
Zalailah Salleh ◽  
Hafiza Aishah Hashim
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Global Financial Crisis ◽  
Supervisory Board ◽  
Internal Audit ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Internal Audit Function

Purpose This paper aims to identify the effects of some corporate governance (CG) mechanisms and Shariah Supervisory Board (SSB) strength on the voluntary use of internal audit function (IAF) by Islamic banks in Sudan. Design/methodology/approach Based on Agency and Stakeholder Theories, this paper hypothesizes that IAF is likely used by Islamic banks with strong CG and Shariah governance systems. To test these hypotheses, we examine the annual reports of 14 Sudanese banks for a period of five years following the global financial crisis in 2008, using logistic regression analysis. Findings This paper found that IAF is likely used by Islamic banks with higher CG disclosure (CGD) and strong SSB. While the findings showed that the audit committee and IAF are likely used as substitutes, this paper also indicated that there is a negative association between levels of Unrestricted Investment Account Holders’ (UIAH) ownership and the use of IAF. However, the evidence of this study did not find any impact for the board of directors’ strength on the use of IAF. Research limitations/implications There may be better measures for some variables in the study model. Additionally, the restriction of the study sample to Sudanese banks may limit the generalization of the results. Therefore, future studies may refine the model and expand the sample to Islamic banks in other countries. Practical implications This paper highlights the importance of IAF for Shariah governance in Islamic banks. Moreover, the insignificant association between the use of IAF and the strength of board of directors has important implications for the board’s effectiveness in Islamic banks. Originality/value This is the first study to investigate the factors associated with the use of IAF by Islamic banks.

scholarly journals Pengaruh Mekanisme Tata Kelola Perusahaan Terhadap Pengungkapan Islamic Financial Social Reporting (Ifsr) Pada Bank Syariah Di Indonesia

2019 ◽  
Vol 1 (3) ◽  
pp. 1518-1529
Author(s):  
Maulidya Wulandari ◽  
Vanica Serly
Keyword(s):  
Financial Reporting ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Descriptive Statistics ◽  
Financial Disclosure ◽  
Social Reporting ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Positive Effect

This study was conducted to determine the effect of independent commissioners and directors on the disclosure of Islamic Financial Reporting (IFSR). Research on Islamic Financial Social Reporting (IFSR) can be said is a fairly recent research finding from a copy of research on ISR, GCG, and financial disclosure. For research in Indonesia, no research has been found that addresses the disclosure of IFSR in Islamic Banks. The IFSR is an index that covers all aspects of financial disclosure, governance, and Islamic social responsibility. The population of this study is Islamic banking in Indonesia, amounting to 12 banks which published annual reports from 2014-2018. Data collection method in this research is documentation study. Analysis of the data used is descriptive statistics, classic assumption tests, and for hypotheses using multiple linear regression analysis. The results of this study indicate that the number of independent commissioners and the number of directors has a positive effect on the disclosure of Islamic Financial Social Reporting (IFSR)

Sign in / Sign up

Export Citation Format

Share Document