The influence of intellectual capital and corporate governance on financial performance of Islamic banks

Abstract

The influence of intellectual capital and corporate governance on financial performance of Islamic banks. Jurnal Ekonomi dan Keuangan Islam, 7(1), 77-91. https://doi.org/10.20885/JEKI.vol7 .iss1.art6 Abstract Purpose-This study aims to analyze the effect of intellectual capital, independent directors, academic directors, and sharia supervisory boards on the financial performance of Islamic banks. The selection of samples observation based on the database of Best Islamic Financial Institutions Award, includes Afghanistan, and Uni Emirate Arab. Methodology-This study uses a sample of 20 Islamic banks in several countries which received the "Best Islamic Financial Institutions Award 2018" by Global Finance Magazine and has published financial reports for the period of 2013-2017. This study adopted panel regression analysis and utilized the Random Effect Model. Findings-The results of the study prove that intellectual capital has a positive effect on financial performance. While independent directors, academic directors, and the Sharia Supervisory Board (SSB) have no effect on the financial performance of Islamic banking companies. These results indicate that intellectual capital is a force for Islamic banking to increase company value through financial performance. While the factors related to corporate governance tend to reduce performance due to several limitations for management in carrying out its operational activities.