The effect of intellectual capital and shariah supervisory boards on social performance of Islamic banks

Abstract

This study examined Islamic banks' social performance by considering Intellectual Capital (IC) and Shariah Supervisory Boards (SSB) as antecedents. More specifically, it examined the antecedents that can exert the role of IC and governance mechanism of SSB in enhancing Islamic banks’ social performance. Therefore, this study empirically analyzed the effect of IC and SSB on social performance in Indonesian Islamic banks with a sample of 14 Islamic banks throughout the period 2008-2019. To test the research hypotheses, panel data regression model analysis was applied. The results did not establish a positive impact of intellectual capital on the banks’ social performance. This result indicated that the size of intellectual capital might not lead to better social performance. This outcome may be due to IC still being the focus of financial performance such that it has not been utilized to optimize the social performance of Islamic banks. The results also showed that SSBs have a positive effect on social performance. It can be concluded that Supervisory Boards could monitor the social activities conducted by Islamic banks, leading to an improvement in the activities. This study helps to bolster the understanding of the role of IC and SSB governance in enhancing the social performance function of Islamic banks.

The Effect of Intellectual Capital, Director’s Educational Background, Islamic Social Reporting, and Firm Size on the Performance of Sharia Maqashid

“…This is done by Islamic banking because Islamic banking realizes that the knowledge possessed by the workforce is very valuable. (Nurdin & Suyudi, 2019) Different research results were conducted by Jetmiko (2018), Gunawan et al, (2019), andPratama et al (2021) found that intellectual capital did not affect banking did not affect. Meanwhile, research conducted by Aisyah et al, (2021) and Rahma & Atiqah (2021) found negative results between intellectual capital and maqashid sharia performance.…”

“…In creating value and companies that grow sustainably, Intellectual Capital plays an important role (Pratama et al, 2021). Companies that use it must gain a competitive advantage in the market to create value and achieve peak performance in the future (Pratama et al, 2019).…”

Intellectual Capital and Social Performance of Indonesian Islamic Banks: The Role of Sharia Supervisory Boards Monitoring Activities

“…Several previous studies have explained that a company's competitive advantage can be associated with corporate social performance (Greening & Turban, 2000;Gregory et al, 2016). From an Islamic banking perspective, previous research (Fatah et al, 2022;Nawaz & Haniffa, 2017;Pratama et al, 2020Pratama et al, , 2021Pratama et al, , 2022Setianto & Sukmana, 2016) has shown that IC has a positive impact on Islamic banking performance. Based on the description above, the hypothesis proposed in this study is as follows: H1: Intellectual capital has a positive effect on the Social Performance of Islamic Banks…”

Intellectual Capital and Social Performance of Islamic Banks in Indonesia and Malaysia: The Moderating Role of Sharia Supervisory Boards

“…As a result, the SSB is concerned with how the IB performs its social functions. The meeting frequency, which indicates the members' monitoring actions, is one SSB element that may be directly related to the company's performance (Pratama et al 2021). Based on the above description, the following hypothesis is offered in this study:…”

“…As a result, the SSB focuses on how the IB carries out its social functions. One feature of the SSB that may be directly tied to the company's performance is the meeting frequency, which represents the members' monitoring actions (Pratama et al 2021). The second factor is gender diversity, which would have a favorable influence on performance if women offered extra oversight to the Board (Adams & Ferreira 2009;Gul et al 2011).…”