ISLAMIC BANKING AND CORPORATE GOVERNANCE

Publication Date : 31/10/2016


Author(s) :

MARIA CHRISTINA LIEM.


Volume/Issue :
Volume 1
,
Issue 2
(10 - 2016)



Abstract :

The corporate governance in Islamic banking industry has multilayer governance systems, because Islamic banks implement Islamic Law or Shari’ah on top of conventional banks governance regulations. Shari’ah Supervisory Board plays important roles in Islamic baking corporate governance and creates differentiation from conventional banking corporate governance. Moreover, as the biggest Muslim population country, Indonesia government promotes the most comprehensive and advanced version of Islamic banking to attract Islamic business and finance from Middle East countries. Therefore, the purpose of this study is to examine the corporate governance implementation of 11 Islamic banks in Indonesia through a focus research question: ‘Is state-own Islamic banks have better corporate governance implementation compared with national Islamic banks in Indonesia’. Research methodology of this study is literature study from corporate governance statement and published annual report year 2014-2015. This study finds that national Islamic banks in Indonesia have slightly better compliance rate in governance implementation compared with state-own Islamic banks in Indonesia. Furthermore, the final compliance rate of governance implementation in Indonesian Islamic banks is less than 50%. It is an alarm that Indonesian Islamic banks need to improve their good corporate governance practices as soon as possible.


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