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This study aims to examine the influence of internal and external factors on the credit risk (represented by nonperforming financing [NPF]) of Indonesian Sharīʿah rural banks (SRBs) – a type of Islamic bank that provides Islamic financial services especially to small and medium businesses in Indonesia. Internal variables comprise capital adequacy ratio (CAR), financing to deposit ratio (FDR), return on assets (ROA), operating expense ratio (OER), financing to value (FTV) and profit and loss sharing (PLS) financing ratio. External variables comprise inflation, economic growth and interest rate.

The study uses the annual reports of SRBs in Indonesia as secondary data for the years 2010–2019. Auto regressive distributed lag (ARDL) is used as the analysis method to examine the short-run and long-run relationships between the variables.

The findings indicate that four variables experienced a lag in the short run, namely, NPF, inflation, CAR and PLS, with different results recorded for each of the variables. Furthermore, the long-run results show that CAR and ROA influence the NPF of SRBs positively, whereas inflation and PLS have a negative influence on NPF. The rest of the variables – notably economic growth, interest rate, FDR, FTV and OER – do not have an influence on NPF in SRBs.

The level of NPF in SRBs exceeds the provision of the Central Bank of Indonesia. The findings are expected to have implications for SRBs and the regulator to consider and to manage the factors related to NPF properly due to the important role of SRBs in small and medium businesses’ development.

This study measures the determinants of NPF using internal and external variables, including the addition of a dummy variable, notably FTV. This study also uses ARDL to analyze the financial policies involving data at the present time and lagged time.

This study aims to examine the factors that influence profit–loss sharing (PLS) financing in Indonesian Islamic banks from the perspective of Islamic banks’ employees. Islamic banks have important role in influencing the amount of PLS financing distribution through their screening process.

This study uses questionnaires in collecting data that are distributed to the employees who process or handle PLS financing in Islamic banks in Yogyakarta, Indonesia. The independent variables are risk, financing screening process, analysis of financial statement and competency of the employees of Islamic banks. The data are processed using multiple regression.

This study finds that risk, the quality of financing screening process and the analysis of financial statement have positive influence on the PLS financing, whereas competency of employees of Islamic banks does not influence PLS financing.

The results of this study are expected to give contribution to increase the role of Islamic banks in encouraging PLS financing. The adequate screening, controlling and monitoring system in Islamic banks should be strengthened to encourage the quality of financing distributed.

Primary data are used in this study to know the perspective of Islamic bank employees in the financing division on the PLS financing. This study attempts to identify the perspective of employees who have direct relationship with the decision of financing in Islamic banks.

This study aims to examine how sharia supervisory board (SSB) characteristics are determinants of the maqashid sharia performance (MSP) of Islamic banks (IBs) and how MSP has implications for profitability and for profit-sharing investment account holders (PSIAHs).

MSP is ascertained by semi-structured interviews. The SSB characteristics measured are size, cross-membership, education level, expertise, reputation, rotation and remuneration. Annual reports of Indonesian and Malaysian IBs from 2010 to 2018 are analysed using panel data regression.

In Indonesia, SSB education level attenuates MSP, while other characteristics have only minor influence. However, in Malaysia, SSB size, education and reputation reinforce MSP, while others are ineffective. MSP in both countries is pseudo-Islamic; so their customers ignore religiosity. However, MSP in Malaysia can improve profitability because sharia assurance is more transparent; meanwhile, MSP in Indonesia cannot improve profitability because sharia assurance is less transparent.

In order for MSP to improve in Indonesia, the regulators need to increase SSB size, reduce cross-membership and arrange the format for sharia assurance in SSB reports, while IBs need to increase SSB education and expertise.

MSP is constructed in accordance with legal and social requirements to achieve IBs’ Islamic, economic, social and ethical objectives. Resource dependence theory is used to evaluate SSB, while PSIAH and profitability are investigated to demonstrate the impact of MSP. Finally, comparing SSB capabilities in Indonesia and Malaysia could be beneficial to regulatory and IB policies.

Qardhul Hasan (QH) is a type of Islamic contract that prioritises benevolent aspects between beneficiaries and the fund provider. The effective management and distribution of QH can contribute to overcoming economic problems in society. This study aims to explore the potential to enlarge the sources of QH funding and QH financing in Indonesian Islamic banks. The paper proposes a framework for QH management in Islamic banks by identifying the sources of QH funds as well as the management and potential allocations of QH funds.

This study uses a descriptive analysis method with a framework-based review to discuss the strategy of optimising the sources, financing and management of QH in Islamic banks. The implementation of QH in the Islamic banking industry is described based on the previous literature and current phenomena.

To positively impact economic development, Islamic banks can collaborate with parties that are more focused on charitable activities and have greater resources to channel and use QH funds. This study also formulates a framework of QH funds management that prioritises efforts to multiply benefits for both the fund provider and the beneficiaries.

The descriptive method used in this paper comprises preliminary research to analyse the current phenomena and potential strategies that can be implemented. Future studies may use empirical data to strengthen the analysis.

The recommendations of this paper can be used by relevant social fund management institutions in collaboration with Islamic banking.

QH reflects not only the social aspects of Islamic banks and extends beyond their corporate social responsibility activities, its effective management will make a greater contribution to reducing the level of unemployment, poverty alleviation and supporting the country’s economic development.

This paper provides a framework that integrates financial institutions in maximising QH fund management to encourage greater benefits for the community. Although previous studies have mentioned the important role of QH, relatively few have considered how Islamic banks maximise its management.

The purpose of this study is to discuss the extent to which Indonesian Islamic banks (IBs) disclose corporate social responsibility (CSR) according to the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) index. It also empirically examines the determinants of CSR disclosure in Indonesian IBs, based on disclosure from AAOIFI index, which is based on Islamic principles.

The determinant used in this paper is the corporate governance (CG) mechanism, which focuses on the board of commissioners (BOC) and Sharia Supervisory Board (SSB) and their characteristics. The paper uses multiple regression analysis to examine the influence of these variables on CSR.

The results indicate that the level of CSR disclosure of IBs measured by the AAOIFI index continues to be low. The statistical results reveal that CSR disclosure has an insignificant relationship with BOC size and SSB qualifications, while the other results show a negative association between the composition of independent BOCs and CSR disclosure, and the frequency of BOC and SSB meeting has a positive effect on this.

The study focuses on Indonesian IBs. The variables of the CG mechanism are limited to the BOC and SSB, while the BOC exists only in countries that adopt two-tier boards.

IBs should provide a wider range of information to be disclosed. The government should establish specific items that need to be disclosed by IBs, considering there are no specific CSR disclosure regulations for IBs in Indonesia.

This study uses the AAOIFI index, which may be a suitable measure of CSR in IBs. The study also analyzes why certain items in the index have a high disclosure level and others do not.

This study aims to identify and describe possible innovations available to the takaful industry in Indonesia by considering demographic characteristics and geographical conditions. Indonesia has a predominantly Muslim population, and thus, presents good potential for the takaful market.

This study uses a qualitative, descriptive, literature-based method to discuss innovation strategies in the takaful industry. This method is appropriate for reviewing particular conditions and phenomena by analysing information and data drawn from existing literature.

Market, product and process innovations are chosen as the strategies appropriate to expanding the takaful market in Indonesia. Strategies are described, which could be used to implement these innovations by influencing the community to participate in takaful, and thus, to expand the takaful market.

The innovation strategies described are adapted to the demographic characteristics of Indonesia and so cannot necessarily be generalised to other countries with different environments.

By considering customer demographic and geographical conditions, the takaful industry should choose the types of innovation that will suit the community characteristics and environmental conditions of Indonesia.

The study specifically discusses innovation strategies in the takaful industry by describing the socio-economic conditions of Indonesian society. Takaful companies in Indonesia can use the results to determine the types of innovation they pursue based on the customer demographic and geographical conditions faced.

Islamic banking provides financial products and services to fulfill the transaction needs of Muslim consumers, and Muslim students are potential consumers who can support the development of Islamic financial institutions. This study aims to examine the factors that influence the intentions of Muslim students to save in Islamic banks. Independent variables in this study are a parental recommendation, location, profit sharing, religiosity, knowledge and financial information disclosure.

The samples in this study are Muslim university students in Indonesia and are divided into two groups as follows: the first group has an educational background in Islamic economics gained at Islamic universities, while the second group is studying at public universities and so do not have a background of this type. The study uses questionnaires to gather data and analyzes this data using a multiple linear regression model.

For the first group, this study finds that profit-sharing, religiosity, knowledge and financial information disclosure influence the intentions of Muslim students to save in Islamic banks. The results for the second group show that parental recommendation, profit sharing and religiosity influence the intentions of Muslim students without an Islamic economic background to save in Islamic banks.

The implications of this study are that the university environment can influence the intention of students to save in accounts at Islamic banks. As students form an important market segment for the banking industry as a new source of accounts and for future profitability, interested parties and in particular Islamic banks may wish to consider these results as part of their strategies for attracting customers.

The respondents of this study consist of Muslim students in Islamic and public universities in Indonesia. The different backgrounds of the students can describe intention levels in their assessments of Islamic banks.

The purpose of this paper is to investigate and compare the extent of voluntary disclosure in the annual reports of Shariah- and non–Shariah-compliant companies in Indonesia. Further, the study examines the relationship between voluntary disclosure and company characteristics (i.e. size of company, profitability, type of auditor, type of industry and ownership structure).

Voluntary disclosure was measured using a disclosure index with 30 items and content analysis of the 2009 annual report. Statistical analysis included descriptive, Mann–Whitney U and regression.

The result revealed that there is a statistically significant difference in the quantity and quality of voluntary disclosure value of Shariah- and non–Shariah-compliant companies. For regression results, the company size significantly influences the quantity of voluntary disclosure while the quality of voluntary disclosure is affected by company size and type of industry.

Although this study only analyses voluntary disclosure in the annual report for a single year (2009), it is hoped to provide a description of the voluntary disclosure in Shariah- and non–Shariah-compliant companies.

The findings might be used by regulators to set regulations that encourage the quantity and quality of disclosure practice of Shariah-compliant companies to expand the scope of disclosure related to religious activities.

This study measures voluntary disclosure using the disclosure index based on Indonesian regulations and the quantity and quality measurement of Shariah-compliant companies, which may differ from previous Indonesian studies.

This study attempts to examine the relationship between board characteristics and dividend payout decisions of conventional and Islamic banks.

This study employed unbalanced panel data of both Indonesian conventional and Islamic banks over the period 2008–2021, estimated using tobit and logit models. Dividend payout decisions were measured using the dividend payout ratio and probability to pay dividends. Meanwhile, board characteristics were represented by board size, board independence, board gender diversity, board meeting, board chairman tenure and board chairman tenure.

The results show that, in the context of conventional banks, board meetings, board chairman tenure and board chairman tenure are correlated with higher dividend payout decisions, while board gender diversity indicates lower dividend payout decisions. On the other hand, in the context of Islamic banks, board size and board meetings are associated with higher dividend payout decisions, while board independence and board chairman tenure are related to lower dividend payout decisions.

This study fills the gaps in the literature on bank dividend policy. It also provides additional insights regarding the relationship between board characteristics and dividend payout decisions in the context of conventional and Islamic banks. In addition, this study gives essential contributions to regulators and investors of both banks, especially in a developing country, Indonesia.

This study is one of the first to provide empirical results regarding the relationship between board characteristics and dividend payout decisions of conventional and Islamic banks. Board characteristics are indicated as one of the fundamental factors that determine dividend payout decisions of both conventional and Islamic banks in Indonesia.