Islamic Governance, Maqashid Syariah, and Islamic Social Reporting: The Case of Islamic Banks in Indonesia

Kautsar Riza Salman

doi:10.13135/2421-2172/6116

Kautsar Riza Salman STIE Perbanas Surabaya

DOI: https://doi.org/10.13135/2421-2172/6116

Keywords: Islamic governance, Maqashid sharia index, Financial performance, Islamic social reporting

Abstract

Many previous studies still examine the Islamic maqashid index as a performance measurement system. This collaborative research uses the maqashid sharia index in another perspective as a determinant that influences the level of Islamic social reporting. In addition, Islamic governance and Islamic social reporting were used in this study. The novelty offered from this study is on the research model which includes financial determinants and non-financial determinants of Islamic social reporting. Financial determinants in this study use profitability, company size, and age of the company. The non-financial determinants include Islamic governance and maqashid sharia index. This study aims to obtain empirical evidence about the influence of Islamic governance, maqashid sharia index, and financial performance on Islamic social reporting. The object of research is 11 Islamic banks in Indonesia in the period 2015-2018. The data analysis technique uses Partial Least Square with SmartPLS version 3 software by applying convergent validity, discriminant validity, reliability and hypothesis testing. The research findings show that the Maqashid Syariah index and financial performance influence the level of Islamic social reporting. The better the maqashid Syariah index the wider the level of social reporting. The stronger effect produced by financial performance on the level of social reporting. In contrast, Islamic governance does not affect the maqashid Sharia index and Islamic social reporting.

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