THE INFLUENCE OF SHARIA COMPLIANCE AND ISLAMIC CUniversitas Muhammadiyah Yogyakarta, ORPORATE GOVERNANCE ON PROFITABILITY IN ISLAMIC BANKS FOR THE PERIOD 2013-2017
Andri Iswanto & Andri Martiana
Universitas Muhammadiyah Yogyakarta, Indonesia
Abstract
Basically, all sharia-based institutions have an applicable legal basis where the legal basis must refer to the Quran and Hadith. Likewise with Islamic banking in getting profits. Where Islamic banking must comply with Islamic Principles which are actually the basis of Islamic banking operations. The purpose of this study was to analyze whether Sharia Compliance and Islamic Corporate Governance had an effect on profitability in Islamic Commercial Banks in Indonesia for the period 2013-2017. In this study, the Independen variable are Sharia Compliance and Islamic Corporate Governance. Sharia Compliance consists of 4 indicators, namely Profit Sharing Ratio (PSR), Islamic Investment Ratio (IIR), Islamic Income Ratio (IsIR), and Zakat Performance Ratio (ZPR) while Islamic Corporate Governance with Self Assessment as an indicator. Dependent variable in this study is Profitability using the indicator of Return on Assets (ROA). The sample was chosen using a purposive sampling method where the total sample used in this study was 7 Islamic Commercial Banks with 5 years of observation period. Secondary data used in this study was carried out with documentation data collection techniques. The analytical method used is Partial Least Square (PLS). The test results show that Sharia Compliance has a significant and positive effect on profitability. While Islamic Corporate Governance has no significant and negative effect on profitability.
Keywords: sharia compliance, Islamic corporate governance, profitability and Islamic Banks.
Topic: International Conference on Islamic Studies in the Digital Era