The social performance of Islamic banks in Indonesia and Malaysia: The role of intellectual capital and shariah supervisory boards / Pratama Bima Cinintya

This study aims to explain the relationship between Intellectual Capital (IC) and governance mechanism of the Sharia Supervisory Board (SSB) with 4 (four) components, namely educational background, reputation, cross-membership, and gender diversity towards Social Performance (SP) of Islamic Banks in Indonesia and Malaysia. This study also, examines the moderating role of SSB characteristics in strengthening the use of IC in improving SP. The objective of Islamic economics is not only to concentrate on commercial goals stated in achieving maximum profit but also on its role in providing welfare to the community, which is the social performance. This social performance is achieved through maqasid sharia performance with 3 (three) objectives, namely education (Tahdhib al-Fard), justice (AI-'Adl), and public interest (Al-Maslahah) to improve the welfare of the community. Islamic banks will help to achieve the SDGs by building social performance and assisting in achieving the Sustainable Development Goals (SDGs). This research is important to improve Islamic banks' social performance. This study was carried out using panel data regression models analysis. Overall, the empirical findings reveal a significant and positive association between intellectual capital efficiency and Islamic banks' social performance in Indonesia and Malaysia. The findings imply that Islamic bank stakeholders in Indonesia and Malaysia should consider intellectual capital resources as one of the factors that leads to better social performance for Islamic banks. On the other hand, each of the SSB characteristics appears to have a different relationship with the social performance of Islamic banks in both countries. While in Indonesia, the SSB educational background has a positive relationship on SP and SSB reputation and cross-membership have negative relationship on SP, those SSB characteristics has no relationship on SP in Malaysia.