Disclosure of Governance Practice by Islamic Banks: An Application in Indonesia

Year 2019, Volume: 5 Issue: 2, 72 - 89, 31.07.2019

İnten Meutia , Mohamad Adam

https://doi.org/10.25272/ijisef.466463

Cited By: 1

Abstract

This study aims to
evaluate the governance practices in Islamic banks in Indonesia by using the
governance standards developed from AAOIFI and IFSB as the international sharia
governance guidelines accepted throughout the world. Furthermore, this research
will also identify what aspects have been and have not been fulfilled by
Islamic banking in Indonesia in order to realize governance as expected. This
research is a quantitative descriptive study that uses content analysis to
explore and analyse the data. This study uses data sourced from annual reports,
financial reports and websites of 12 Islamic banks in Indonesia, in 2016.
Overall the data indicated that the index of governance of Islamic banks in
Indonesia was still low when the guidelines sourced from AAOIFI and IFSB were
used as benchmarks. The average score achieved by Islamic banks was 37%. Based
on the guidelines prepared by Hasan (2011), the score was classified as
emerging practices. The focus of Islamic banks to general governance was higher
than specific governance information. Statistical tests demonstrated that this
difference is significant. 

Keywords

Corporate Governance, Islamic Financial Institutions, Sharia Governance

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