Corporate social responsibility (CSR) based on Maqasid Al-Shariah disclosure and impact towards Islamic banks financial performance in Malaysia and Mena region / Nur Hanisah Moahamad Razali

Islamic Banking works in an economy and achieving the ideal position of Shariah financial institution requires continuous improvement and indicators. The right values and environment of a bank that is operating based on Shariah are important to ensure that the delivery services could be executed in the best manner possible. Islamic Bank therefore should embed with social and the charity work network for the purpose of its corporate social responsibility to the community. The fundamental issue which is due to the lack of focus on the prioritising the social objective of Islamic organisations based on Shariah lead to the inadequacy of conventional CSR theories to underpin CSR practices of Islamic organisations. The existing concept of CSR is grounded on western perspectives. Therefore, it is of great implication to delve CSR within the Islamic perspectives. There have been various studies of the possible advantages that company may obtain through CSR activities as it involves enormous costs. However there appear to be an inconsistent scrutiny on the relationship between CSR and corporate financial performance. Thus, this purpose of this to examine the extent of CSR based on Maqasid Al Shariah in term of four dimensions which are community, workplace, marketplace and environment and its impact on performance of Islamic Banks sector between Malaysia and MENA region for the period of 2013 to 2019. This study employed content analysis method to collect quantitative data and Fixed Effect Regression Model to achieve its objectives based on the Bank Islam annual report and stand-alone sustainability report. In other words, content analysis and regression analysis were carried out to achieve this objective. Generally, the CSR activities cover all organization activities related with the organizations and its various stakeholder. The independent variables used to determine CSR based on maqasid Al-Shariah to measure the financial bank performance that is the dependent variable, Return on Asset (ROA) is used in this study. Based on this model, researcher concluded that Maqasid Al Shariah CSR’s elements which are environment, community, and marketplace have significant impacts on banks financial performance. Through content analysis in measuring the extent for CSRD dimensions, it shows that there was mixed ranking for CSR based on Maqasid Al-Shariah dimension and element in Malaysia and MENA region. By employing panel data regression model, the linkage between CSR and CFP found to be significant. The findings from this study could contribute to the body of CSR literature regarding the understanding of CSR-I disclosure and impact it has towards CFP on Islamic Banks in Malaysia and MENA Region. This study also important for both business and regulators to implement mechanism for enhancing high quality CSR practices.