Islamic Corporate Governance: Pengaruh Tingkat Pedidikan dan Keahlian Keuangan Dewan Pengawas Syariah (DPS) terhadap Perilaku Pengambilan Risiko

Abstract

This study examines the effect of DPS characteristics on risk-taking behavior in Indonesian Islamic banking in 2010-2016. The first characteristic tested is the level of education and the second is SSB expertise in finance. The population of this research is Islamic banks in Indonesia, while the sample consists of 63 Islamic commercial banks in Indonesia, which were selected by purposive sampling method. The measurement used for the education level of DPS is the percentage of DPS with a master's degree, while for financial expertise it is used the percentage of DPS who have expertise in finance. Then to measure the bank's risk-taking behavior, the Z-score is used. The results of hypothesis testing indicate that hypotheses 1 and 2 are accepted. From the results of the study, it can be concluded that the higher the education level of DPS, will encourage Islamic banks to take bigger risks. And the increasing number of SSB members who have a background of expertise in finance will limit Islamic banks in taking risks.

Influence of the Shariah supervisory board on tax avoidance at an Indonesian Islamic bank

“…The RDT assumes that SSB is an IB resource that plays an essential role in IB supervision (Nomran et al, 2018) to minimize tax avoidance. SSB members with doctoral degrees are considered to have a lot of knowledge and experience in performing better supervision (Luthan, 2021). This argument is in line with the research of Almutairi and Quttainah (2017) and Muhammad et al (2021) that SSB with a doctoral degree positively influence Shari' ah compliance and IB performance.…”

“…SSB, who have a scholarly background and a master's degree, better understand the implications of good Shariah in Islamic financial institutions (Farook & Lanis, 2007). SSB members with higher education are considered to have a wealth of knowledge and experience, so they can supervise Islamic banks so that they do not avoid tax more effectively (Luthan, 2021).…”

“…The SSB controls IB activities under Shariah principles. The complexity of banking activities requires that SSB members not only be experts in Shariah but also have expertise in other fields (Khan et al, 2018;Luthan, 2021). SSB members with Islamic accounting and finance expertise qualifications increase the effectiveness of their supervision (Muhammad et al, 2021).…”

“…The SSB is a unique part of the Shariah governance. SSB are knowledgeable people in Islamic law who oversee the implementation of Shariah in Islamic financial institutions (Luthan, 2021). The presence of an SSB in the IB is crucial because it ensures that its operations comply with Islamic principles.…”