Zakat and Islamic Corporate Social Responsibility: Does It Take Effect to the Performance of Shari’a Banking?

Abstract

The less than optimal regulation of zakat companies in sharia banking in Indonesia has been salient to the background of this research. This study aims to examine the influence of zakat and Islamic corporate social responsibility (ICSR) to the reputation and performance of companies. Sample data was selectively gathered from 10 sharia banks in Indonesia from 2011 to 2014. Normality test and logistic regression are used to test the effect of zakat on company reputation, the influence of ICSR on company reputation, the influence of zakat on company performance, and the influence of ICSR on corporate performance. The results show that zakat has a positive influence on and is significant to a company's reputation, that ICSR has a positive influence on and is significant to a company's reputation, that zakat has a positive influence and significant impact on the performance of a company, and that ICSR has a positive relation, but no significant effect on company performance. These findings indicate the importance of paying zakat and ICSR as a business strategy for the sharia banking market in Indonesia today. Keywords: zakat, Islamic corporate social responsibility, company performance

Implementation of Islamic Corporate Governance, Islamic Corporate Social Responsibility and Financial Performance Toward Reputation (Study of Sharia Commercial Bank in Indonesia)

“…The test results are in line with the hypothesis. This study supports research Khusnawati and Andraeny [4], Arifin and Wardani [7], Reskino [8]. The more indicators that revealed it will bring good perception by investors that will enhance the reputation of Islamic banks.…”

“…Branco and Rodrigues Research, showed that companies that have a high profile ICSR able to improve their interaction with customers, suppliers, and investors that the results are improving reputation [5]. The same result was shown by Khusnawati and Andraeny [4], Arshad et al [6], Arifin and Wardani [7], and Reskino [8]. The opposite results shown by Bank Indonesia [10], while Hanzaee and Sadeghian research proved that CSR does not have a proportional relationship with the company's reputation [9].…”

“…Conversely, if the bank in deposits below the market average have a bad reputation, coded 0. Research was conducted by Reskino [8].…”

“…Research on the ICSR, from year to year also show the results have not been consistent. The ICSR has a positive and significant impact on reputation [4][5][6][7][8]. However, the research results proved that CSR does not have a proportional relationship with the reputation [9].…”

Islamic Corporate Social Responsibility Towards Asset Optimization in Indonesia Sharia Commercial Banks Islamic Corporate Social Responsibility Towards Asset Optimization in Indonesia Sharia Commercial Banks

“…ICSR is a CSR concept that emphasizes the spiritual approach as the basis of the company's obligation to be socially responsible to the surrounding environment, both the natural environment and society [14]. The concept of ICSR disclosure carried out by Islamic financial institutions must cover all activities aimed at ICSR objects, namely nature, direct stakeholders, and indirect stakeholders.…”