SHARIAH SUPERVISORY BOARD OF ISLAMIC BANKING IN INDONESIA: MEASUREMENTS AND ITS EFFECTS ON FINANCIAL PERFORMANCE
Himmatul Kholidah (a,f), Hanifiyah Yuliatul Hijriah (b,g*), Bani Alkausar (c), Nisful Laila (d), Muhammad Ubaidillah Al Mustofa (e)

a,b,c) Business Department, Faculty of Vocational Studies, Universitas Airlangga.
d) Islamic Economics Department, Faculty of Economics and Business, University of Airlangga
e) Department of Development Studies, Institut Teknologi Sepuluh Nopember
f,g) Doctoral Program of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga
*hanifiyah.y.hijriah[at]vokasi.unair.ac.id

Abstract

Purposes: This study aims to empirically test the Islamic governance of Islamic banks which are reviewed based on the indicators of the Shariah Supervisory Board (SSB) on the financial performance of Islamic banking in Indonesia. In view of the lack of availability of regulations that regulate optimal standards and minimum structure of SSB in Islamic banks, this needs to be studied further on these conditions empirically.
Methods: This research is quantitative based research. This study examines the relationship between SSB size, SSB cross-membership, SSB educational qualification, SSB expertise and financial performance using sample of 14 Islamic banking for the period 2014-2020. The analysis technique in this study uses Multiple Regression Analysis.
Results: The results showed that the SSB Size, Education, Financial and Accounting Expertise could not contribute to the financial performance of Islamic banking, Meanwhile, Cross-Membership negatively affects the dependent variable. In general, the performance of Islamic banking showed a satisfactory financial performance with a relatively low risk of failure. The result indicates the low contribution of SSB in directing the managerial activities of Islamic banking. Most SSB in Islamic banking has a background contrary to the background of banking management and finance.
Conclusion and suggestion: This study tries to present a portrait of SSB for Islamic banking performance so that the results of the study can be a recommendation for the government and policy makers to pay attention to SSB and its competence to assist the development of Islamic banks through clear and comprehensive regulations.

Keywords: Shariah governance- financial performance- Islamic banking- shariah supervisory board- financial sustainability

Topic: Islamic accounting, auditing, and performance changes