Corporate Social Responsibility Disclosure and Islamic Bank Profitability (Evidence from Indonesia)

Corporate Social Responsibility (CSR) in the Islamic perspective is expected to be an existential part of Islamic banks and financial institutions providing benefits to society and the national economy. CSR disclosure in a company's annual report may increase companies' value and satisfy s...

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Bibliographic Details
Published inReview of Integrative Business and Economics Research Vol. 10; pp. 369 - 399
Main Authors Faturohman, Taufik, Nugraha, Tsamara Hasanah, Irawan, Atika
Format Journal Article
LanguageEnglish
Published Hong Kong Society of Interdisciplinary Business Research 01.01.2021
Subjects
Annual reports
Banking industry
Banks
Commercial banks
Corporate profits
Ethics
Financial institutions
International organizations
Islam
Islamic financing
Limited liability companies
Philosophy
Profitability
Social responsibility
Society
Stakeholders
Indonesia
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Summary:Corporate Social Responsibility (CSR) in the Islamic perspective is expected to be an existential part of Islamic banks and financial institutions providing benefits to society and the national economy. CSR disclosure in a company's annual report may increase companies' value and satisfy stakeholders' needs to achieve higher profitability. This research aims to examine the relationship between CSR disclosure and profitability for Islamic banks in Indonesia over the period 2008- 2017 by generating CSR-related data through disclosure analysis based on the standards developed by the Accounting and Auditing Organization for Islamic Financial Institutions (AAIOFI) of annual reports of the 12 sampled banks registered in Bank Indonesia. Using panel data regression on CSR disclosure index, individual dimension index, size, capital ratio, financing ratio, and overhead expense as independent variables, the dependent variable is the proxy's profitability by using Return on Asset (ROA). The results indicate a significant positive relationship between CSR disclosure and the profitability of Indonesia Islamic banks. However, 'commitment toward debtors,' 'bank size', 'zakat, charity, and benevolent funds' show no significant relationship with the Islamic bank's profitability in Indonesia. The recommendation for several concerns on the negative variables has been identified in this research.
ISSN:2414-6722
2304-1013