CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE AND ISLAMIC BANK PROFITABILITY: EVIDENCE FROM INDONESIA

• Main Author: Hasanah Nugraha (19015209), Tsamara
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/31384
• Institution: Institut Teknologi Bandung

The development of sharia banking in Indonesia is directed to provide a great benefit to society and optimally for the national economy. By increasing the value of companies that interest investors in order to achieve a higher profitability that might be supported by the disclosure of CSR in a company's annual report. Beside that, CSR from an Islamic perspective also expected to be an existential part of any Islamic banks and financial institutions. Therefore, the aim of this research is to examines the relationship between corporate social responsibility (CSR) disclosure and profitability for Islamic banks in Indonesia region over the period 2008–2017 by generating CSR-related data through disclosure analysis based on the standards developed by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAIOFI) of annual reports of the 12 sampled banks which registered in Bank Indonesia. This research is conducted using CSR disclosure index, individual dimension index, size, capital ratio, loan ratio, and overhead expense as independent variables, while dependent variable is profitability that proxied by using Return on Asset (ROA). The method used to analyse the data is panel data regression, since this research using a combination of cross-sectional data and time-series. The results of this research indicate that there is a significant positive relationship between CSR disclosure and the profitability of Indonesia Islamic banks. Nevertheless, for the three individual dimensions; ‘zakat, charity, and benevolent funds’, ‘commitment toward debtors’, and ‘commitment toward community’ shows negative results as it indicates there is no significant relationship with Islamic bank’s profitability in Indonesia. Therefore, the recommendation for several concern on the negative variables have been identified in this research.