Social Performance of Islamic Banks in South-East Asia: Is Intellectual Capital and Sharia Supervisory Boards Matters?

Abstract

This study aimed to examine Islamic banks' social performance by considering the effect of Intellectual Capital (IC) and Shariah Supervisory Boards (SSB) aspects which are SSB educational background and SSB gender diversity. This study employed longitudinal sample of Islamic banks in South-east Asia region with a sample of 32 Islamic banks during the period 2005-2020. To test the research hypotheses, panel data regression model analysis was applied. The findings revealed that intellectual capital has a positive impact on the social performance of Islamic banks, demonstrating that greater utilization of intellectual capital leads to improved social performance. Gender diversity among SSBs also has a positive impact on social performance, according to the findings. It can be concluded that the presence of woman in Supervisory Boards could give more broad perspectives in decision-making so that social performance conducted by Islamic banks will lead to an improvement in the activity’s contribution. Meanwhile, Contrary to popular belief, PhD-qualified members with research and analytical skills appear to bring no value to social performance. The control variable of bank size doesn’t have effect on Islamic banks’ social performance. Overall, this research contributes to a better understanding of the impact of IC and SSB governance in improving Islamic banks' social performance functions.