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Article
Publication date: 17 November 2023

Faris Shalahuddin Zakiy, Falikhatun Falikhatun and Najim Nur Fauziah

This paper aims to investigate the impact of sharia governance on organizational performance in zakat management institutions in Indonesia over the period 2017–2021.

Abstract

Purpose

This paper aims to investigate the impact of sharia governance on organizational performance in zakat management institutions in Indonesia over the period 2017–2021.

Design/methodology/approach

This study examined 33 zakat management organizations in Indonesia from 2017 through 2021 for 151 observations. Gross allocation ratio and growth of ZIS collection are used as organizational performance measures. The independent variables in this study are board of director size, educational background of the board of directors, sharia supervisory board size, sharia supervisory expertise, supervisory size and management size. Also, the study uses size, age and audit opinion as control variables to help measure the relationship between sharia governance and organizational performance.

Findings

This study shows that the board of directors and supervisory size positively and significantly affect organizational performance. Then, the educational background of board of directors has a negative and significant effect on organizational performance. In Model 1, sharia supervisory board size has a positive and significant effect on organizational performance, but in Model 2, sharia supervisory board size does not. Meanwhile, sharia supervisory expertise and management board size do not affect organizational performance.

Practical implications

The findings in this study illustrate the importance of transparency in the zakat management organization. Transparency helps minimize conflicts of interest and information asymmetry in the zakat management organization. In addition, sharia governance mechanism helps regulators and top management to make effective policies to improve and enhance organizational performance.

Social implications

Sharia governance is essential for zakat management organizations to increase accountability, credibility and public trust and support the practice of zakat management organizations.

Originality/value

This study discusses sharia governance and organizational performance in socioreligious organizations, especially zakat management organizations, which are still rarely carried out. Thus, this study broadens the insights of sharia governance and highlights the importance of performance appraisal in zakat management organizations.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 12 July 2022

Prasojo Prasojo, Winwin Yadiati, Tettet Fitrijanti and Memed Sueb

The purpose of this study is to examine the relationship between intellectual capital, sharia governance and Islamic bank performance based on the maqasid sharia index, as well as…

Abstract

Purpose

The purpose of this study is to examine the relationship between intellectual capital, sharia governance and Islamic bank performance based on the maqasid sharia index, as well as the moderating effect of sharia governance on the relationship between intellectual capital and maqasid sharia index.

Design/methodology/approach

Dynamic panel regression is used with the two-step generalised method of moments with data from the Bankscope database for 2014–2018.

Findings

The results show that higher intellectual capital efficiency improves Islamic bank performance based on maqasid sharia. Larger board sizes are also found to improve Islamic bank performance. By contrast, higher sharia supervisory board quality and larger independent boards can reduce Islamic bank performance. In the moderating relationship, sharia governance is proven to moderate the relationship between intellectual capital and Islamic bank performance.

Research limitations/implications

This study used a sample that is restricted to Islamic bank and only used value-added intellectual coefficient to measure intellectual capital. Thirdly, the quality of the sharia supervisory board only involves the presence, size, expertise and doctoral qualification of the sharia supervisory board.

Originality/value

This research: analyses the relationship between intellectual capital, sharia governance and Islamic bank performance in one research framework; uses maqasid sharia index-based Islamic bank performance benchmarks; and examines the moderating effect of sharia governance on the relationship between intellectual capital and maqasid sharia index.

Details

Journal of Islamic Marketing, vol. 14 no. 8
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 7 June 2022

Yudho Taruno Muryanto

This article aims to explore legal challenges regarding the regulation and supervision of Islamic Fintech and to construct Sharia compliance regulations to strengthen the…

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Abstract

Purpose

This article aims to explore legal challenges regarding the regulation and supervision of Islamic Fintech and to construct Sharia compliance regulations to strengthen the supervision of Islamic Fintech operation.

Design/methodology/approach

This type of research is legal research, adopting the statute approach, comparative approach, and conceptual approach. The focus of the study is Indonesia with comparative studies with Malaysia and the United Kingdom.

Findings

Malaysia, Indonesia, and the United Kingdom are all on the top five countries in the Global Islamic Fintech (GIFT) Index. The list comprises countries that are most conducive to the growth of the Islamic Fintech market and ecosystem. However, weak supervision and low Sharia compliance are still becoming prominent challenges in the implementation of Islamic Fintech, while Sharia compliance is the core principle for Islamic finance regulation. Another finding is that a good ecosystem of Islamic Fintechs needs supportive regulations and policies, a Sharia Supervisory Board, and standards of Islamic Fintech Shariah governance.

Research limitations/implications

This study examines the regulation and supervision of Islamic Fintech in Indonesia, Malaysia, and the United Kingdom countries whose Islamic Fintech industry is growing rapidly.

Practical implications

This study is a strong reference for countries with potential Islamic finance, especially when they are constructing the Sharia compliance regulations to strengthen the regulation and supervision of the Islamic finance industries.

Social implications

Sharia compliance regulations can be a subsystem in the Islamic financial ecosystem to encourage Sharia economic growth in various countries.

Originality/value

To ensure Sharia compliance, it is recommended to take some steps: (a) creating the Sharia compliance regulations; (b) creating the Sharia supervisory boards; and (c) standardizing the Sharia governance of Islamic Fintech.

Details

Journal of Financial Crime, vol. 30 no. 5
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 14 February 2023

Muhammad Taufik, Rifqi Muhammad and Peni Nugraheni

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…

Abstract

Purpose

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).

Design/methodology/approach

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.

Findings

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.

Practical implications

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.

Originality/value

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.

Details

Journal of Islamic Accounting and Business Research, vol. 14 no. 8
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 15 May 2023

Annisa Adha Minaryanti and Muhammad Iman Sastra Mihajat

The purpose of this paper is to systematically review the study of the relationship between sharia governance (SG), which is represented by the Sharia Supervisory Board (SSB), and…

Abstract

Purpose

The purpose of this paper is to systematically review the study of the relationship between sharia governance (SG), which is represented by the Sharia Supervisory Board (SSB), and internal sharia compliance, and whether it can affect the performance of Islamic banking.

Design/methodology/approach

Literature search consists of two steps: random literature review and systematic literature review. The methodology adopted in this article is a systematic literature review.

Findings

The variable of internal sharia compliance, sharia risk and internal sharia audit on one of the indications of SG newly researched variable which will later be used as a new paradigm, to measure the implementation of Islamic sharia principles in sharia banking.

Practical implications

The development of a conceptual framework by using measurement of the new SG has practical implications for sharia bank, which can later be applied to also increase sharia banking performance by complying with Islamic sharia principles. This new concept can be used as a reference by the Financial Service Authority (Otoritas Jasa Keuangan) to establish regulations regarding SG framework, especially in Indonesia.

Originality/value

Further research can add more of it or replace it with other variables that are more relevant, in such a way that it could be empirically tested on how the independence and remuneration (lit. performance allowance) of SSB and the internal sharia control team can affect the performance of sharia banks.

Details

Journal of Islamic Accounting and Business Research, vol. 15 no. 4
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 11 July 2023

Erny Arianty, Tuti S.B. Utami, Syanni Yustiani and Rizqi Haniyah

This study aims to analyze the effectiveness of the spin-off policy which includes clarity of objectives and criteria, implementation and monitoring and evaluation functions.

Abstract

Purpose

This study aims to analyze the effectiveness of the spin-off policy which includes clarity of objectives and criteria, implementation and monitoring and evaluation functions.

Design/methodology/approach

The method used is a qualitative method with a theme approach and the analytical hierarchy process (AHP). Data were obtained from the results of focus group discussions and AHP questionnaires with informants from Indonesian Sharia Insurance Association (AASI), the sharia life and general insurance industry, the Sharia Supervisory Board, the government and regulators.

Findings

The results of the research are the effectiveness of the clarity of goals and criteria has not been realized optimally, the effectiveness of increasing profitability has not been realized, and the effectiveness of the monitoring and evaluation functions by the government and regulators has been realized. The supporting factor that has the highest level of importance is the role of the government and regulator.

Research limitations/implications

The limitation of this research is that it has not used a wider range of profitability test tools and projections. The theoretical implication of this research is as a reference for robust research in identifying spin-off success factors because this study uses a mixed method where qualitative methods are used in the study using data from theory and expert informants from three parties: regulatory parties, associations (AASI) and the insurance company (life insurance and general insurance). These results form the basis for compiling a questionnaire with a quantitative method so that the data is become relevant based on theory (design) and practical side.

Practical implications

Practical implication of the study is that the Islamic insurance industry has to prepare to achieve condition of Tabarru funds and the investment reaches 50% of the main insurance fund. AASI, as the sharia insurance industry organization, continues innovating the most suitable form of spin-off that can be achieved by the Sharia business unit and also continues to coordinate with regulators to discuss existing problems. The government and regulators also support the implementation of the spin-off by providing convenience in various aspects such as spin-off period relaxation and government incentive and relaxation to enhance sharia insurance industry.

Originality/value

The contribution of the results of this research for the government and regulatory agencies is as input in setting policies and regulations related to spin-offs, for the industry is expected to be more prepared in terms of resources, commitment and strategy.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 27 September 2023

Early Ridho Kismawadi

This study aims to examine the impact of agency cost, Islamic board characteristics and corporate governance on the performance of Islamic institutions.

Abstract

Purpose

This study aims to examine the impact of agency cost, Islamic board characteristics and corporate governance on the performance of Islamic institutions.

Design/methodology/approach

Based on the selected criteria, 92 Islamic banks (IBs) from 20 countries were selected for further research. The authors used generalized method moments (GMM) estimation method. The agency cost and Shariah board characteristics are the explanatory variables. The author uses the age of the bank and the size of the bank for variable control.

Findings

Empirical results indicate that first, agency costs represented by cast/total assets negatively affect IBs’ return on equity and net income. As agency costs rise, IBs’ financial performance declines. Second, Shariah supervisory board (SSB) size and board independence affect IB performance. The study found that SSB size positively affects IB performance.

Research limitations/implications

This research contributes to the literature on IBs in different countries, which policymakers and practitioners can use to improve agency cost functions and Shariah board characteristics. Second, this analysis shows that IBs require specific attention for agency charges, given their operations and business structures. This study contributes to agency theory, which requires Islamic banking information and practices. Finally, the author has aided regulators and IBs by identifying the sources of agency cost practices that can be resolved. The other bank governance contribution is twofold. First, the author studied dual board governance in IBs (SSB and ordinary boards of directors). Second, the author examines how SSB and traditional board governance affect IB performance. This research focuses on banks listed on stock exchanges in the 20 countries analysed.

Practical implications

The research has policy and practical implications for central banks and IBs. By outlining appropriate regulatory guidelines and reporting systems, regulatory authorities can ensure Sharia compliance and protect the independence of IB Shariah department officers. Regulators and relevant stakeholders must ensure Sharia compliance, audits, inspections, reporting and accurate disclosure for IBs.

Originality/value

This paper offers original contributions to professionals in the field of IBs and stakeholders investigating the relationship between agency costs, governance of IBs, characteristics of Islamic supervisory boards and the performance of IBs.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 26 February 2024

Sabrine Cherni and Anis Ben Amar

This study aims to examine how digitalization affects the work efficiency of the Shariah Supervisory Board (SSB) in Islamic banks.

Abstract

Purpose

This study aims to examine how digitalization affects the work efficiency of the Shariah Supervisory Board (SSB) in Islamic banks.

Design/methodology/approach

This study uses panel data analysis of annual report disclosures over the past 10 years. The authors have selected 79 Islamic banks for the period ranging from 2012 to 2021. The criteria for SSB efficiency used in this research are disclosure of Zakat and disclosure in the SSB report.

Findings

The econometric results show that digitalization has a positive effect on improving the work efficiency of the SSB in Islamic banks. Accordingly, the authors provide evidence that the higher the bank's digital engagement, the higher the quality of the SSB.

Originality/value

The findings highlight the need to improve the current understanding of SSB structures and governance mechanisms that can better assist Islamic banks in engaging in effective compliance with recent governance and accounting reforms. Moreover, Islamic banks are the most capable and appropriate to implement and activate digitalization because they are based on a vital root calling for development if there are executives believing in it, as well as legislation supporting and serving them.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 20 September 2023

Abdelhafid Benamraoui, Tantawy Moussa and Mostafa Hussien Alsohagy

This paper aims to investigate the disparity and compliance of information disclosures in Islamic banks (IBs). Specifically, the research examines IBs’ compliance with Sharia…

Abstract

Purpose

This paper aims to investigate the disparity and compliance of information disclosures in Islamic banks (IBs). Specifically, the research examines IBs’ compliance with Sharia disclosure requirements.

Design/methodology/approach

To determine the extent of disclosures and compliance with Islamic business principles, content analysis is applied to the annual reports of a sample of IBs from 11 countries. A comprehensive reporting framework has also been developed to assess the transparency and compliance of IBs with Islamic business principles. Institutional theory and core Islamic principles are used to inform the study and its findings.

Findings

The results reveal that IBs demonstrate limited transparency on the key Sharia compliance issues, and there is a wide variation in the level of reporting across the countries studied. Moreover, the authors find that IBs located in the single integrated regulatory framework (RF) countries disclose more information, followed by those located in dual RF countries and then those located in Islamic RF countries.

Originality/value

This study presents a unique and comprehensive framework to assess the areas of Sharia disclosure by IBs and provides a conceptual rationing for the actual level of IBs’ Sharia reporting. This study also fills a significant gap in the literature, as most studies in this field are based on a single-country study. The results are deemed of direct relevance to IBs’ managers, investors, policymakers, regulators and the wider public, particularly in the Muslim world.

Details

Accounting Research Journal, vol. 36 no. 4/5
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 1 September 2023

Yunice Karina Tumewang, Indri Supriani, Herlina Rahmawati Dewi and Md. Kausar Alam

This study aims to identify the significant scientific actors, reveal the intellectual structure and explore essential features for future research direction in Sharia governance…

Abstract

Purpose

This study aims to identify the significant scientific actors, reveal the intellectual structure and explore essential features for future research direction in Sharia governance studies.

Design/methodology/approach

The study applies a hybrid review combining bibliometric analysis and content analysis. It uses Rstudio (biblioshiny), VOSviewer and Microsoft Excel to analyze 457 articles published in 206 journals indexed by Scopus and/or Web of Science during the period of 1985 until the end of 2022.

Findings

The paper discovered four distinct streams of Sharia governance studies: structure of Sharia governance, Sharia governance and risk management, Sharia governance and sustainability and the effect of Sharia governance toward firm’s financial performance. Furthermore, it derives and summarizes 26 main research questions for future studies.

Research limitations/implications

In terms of theoretical implications, the finding contributes to the general literature on Sharia governance by conducting bibliometric analysis and content analysis. In terms of practical implications, this study suggests that Sharia governance should be strengthened by the management of Islamic banks and other Islamic-based businesses.

Originality/value

To the best of the authors’ knowledge, this study is among the early studies using a hybrid review on the topic of Sharia governance, allowing future researchers in this field to capture the trends and progress of current literature as well as the research gaps to be filled in by future researchers.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

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