DOES THE USAGE OF ISLAMIC DEBT FINANCING RELATED TO THE CEO CHARACTERISTICS, FIRM CHARACTERISTICS, AND THE COVID-19 PANDEMIC? EVIDENCE FROM LISTED COMPANIES IN INDONESIA

• Main Author: Haris Nurhafizah, Raihana
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/73342
• Institution: Institut Teknologi Bandung

Approximately thirty years after establishing the first Islamic bank or finance in Indonesia—the country with the largest Muslim population—raises the compelling question of why Islamic finance possesses such a small market share, amounting to only 7.03% in Indonesia. This groundbreaking research undertakes the first study to examine the relationship between CEO characteristics, firm characteristics, and the effect of the COVID-19 pandemic on the adoption of Islamic debt financing, focusing on evidence from listed companies in Indonesia. From 2017 through 2021, a carefully selected sample of 59 companies—representing all companies that utilized Islamic finance—was gathered from available reports on the IDX in 2022. However, due to the unavailability of specific data, the sample size was eventually reduced to 30 companies after filtration using the access data from 2017 to 2021. It is worth noting that listed companies dutifully adhere to the IDX data, making this sample highly representative of the overall landscape. Moreover, this study used the panel data regression model to explore the complex associations between variables and compliance levels. Thus, the significant findings indicated that the presence of Muslim CEOs was positively associated with the CEOs' allocation of additional Islamic debt financing to their companies. In addition, firm size and cost- effectiveness were negatively significant relationships in Islamic debt financing. The investigation uncovered no significant difference in using Islamic debt financing before and during COVID-19. Therefore, this study may be helpful for financial regulators such as Bank Indonesia and OJK to use these findings to enhance the market share of Islamic finance in Indonesia.