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THE CORPORATE GOVERNANCE EFFICIENCY AND ISLAMIC BANK PERFORMANCE: AN INDONESIAN EVIDENCE

Hadri Kusuma () and Ariza Ayumardani ()
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Hadri Kusuma: Department of Accounting, Islamic University of Indonesia
Ariza Ayumardani: Department of Accounting, Islamic University of Indonesia

Polish Journal of Management Studies, 2016, vol. 13, issue 1, 111-120

Abstract: The objective of this study is to investigate the effect of the corporate governance efficiency consisting of variables board director’s size, board commissioner’s size and sharia supervisory board’s size on the Islamic bank performance in Indonesia. The study of the corporate governance structure in the banking sector is an important component within the enhancement of banks’ efficiency and performance. Using purposive sampling, 11 Islamic banks were selected as the sample for the period of the year 2010 to 2014. The data were from the financial statements and annual reports of the Islamic banks. The measurement of the corporate governance efficiency employed the Data Envelopment Analysis with the help of the EMS software. Regression using panel data were employed to analyze the relationship between the efficiency and bank’s performance. The findings show that the efficiency level of corporate governance of Indonesian Islamic banks improved significantly during the period of research. In addition, the corporate governance efficiency significantly corelated to the Islamic bank performance. The study results draw some implications for policy that helps to improve performance of the banking sector.

Keywords: corporate governance; efficiency; bank’s performance; Islamic Banks (search for similar items in EconPapers)
Date: 2016
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