Analysis of the Effect of Islamic Corporate Governance on the Financial Performance of Islamic Banking in Indonesia

Abstract

This research is motivated by the importance of financial performance for the company as a consideration for the management in making financial decisions. The purpose of this study is to analyze the influence of Islamic Corporate Governance on the Performance of Islamic Banking in Indonesia. In this study, Islamic Corporate Governance is measured by indicators of the board of commissioners, the composition of the board of commissioners and the audit committee. While the financial performance variable is measured by Return On Assets (ROA). The population in this study are Islamic Commercial Banks (BUS) registered at Bank Indonesia as many as 11 banks. Based on the purposive sampling method , the samples obtained were 8 Islamic banks that met the criteria. The research data was obtained from the annual report during the 2016-2020 period. The analytical method used is panel data regression analysis with Eviews for windows version 9.0 software . The results of the study show that Islamic corporate governance has a positive and significant effect on the performance of Islamic banking. Thus, to improve the performance of Islamic banking, it is necessary to improve Islamic corporate governance.