Muqtasid: Jurnal Ekonomi dan Perbankan Syariah

The effect of environmental, social, and governance practices on profitability performance with financial slack as a moderator

2024-10-06T00:49:57+00:00

This study aims to obtain empirical evidence on the effects of environmental, social, and governance (ESG) on the profitability performance of Islamic companies, incorporating the moderating effect of financial slack in this relationship. The sample includes Islamic companies listed on the Jakarta Islamic Index 70 (JII 70) and the SRI KEHATI index over the 2021-2023 period, resulting in 129 firm-year observations. Panel data analysis using Eviews 13 software identified the Random Effect Model as the best approach. Findings indicate that ESG practices significantly affect profitability, supporting agency theory by suggesting that management may engage in ESG activities that incur costs without clear financial benefits for shareholders. Financial slack does not moderate the ESG-profitability relationship. Instead, financial slack, proxied by the cash ratio, directly impacts profitability. These findings suggest that while ESG practices may have profitability trade-offs, financial flexibility could enhance profit potential in Islamic companies. For policymakers, these results underscore the need to tailor ESG frameworks to the unique financial dynamics of Islamic companies, potentially aiding these firms in achieving both sustainable and profitable growth.

Exploring models and issuance of Indonesian sovereign Sukūk as a financial instrument for state budget deficit

2024-10-05T02:49:44+00:00

This study explores the concept and practice of sovereign sukūk issuances managed by the Government of Indonesia as an instrument to finance the state budget deficit in Indonesia. The government has been forced to employ a budget deficit policy to fund the vast country’s spending. To finance the deficit, the government uses sovereign sukūk (named Sukūk Negara) as one of the financial instruments in addition to sovereign bonds (called Surat Utang Negara). The study uses a qualitative method with library study and interviews as the data collection techniques. The finding shows that the government has developed four models of sovereign sukuk structure, named Ijārah Sale and Leased Back, Ijārah al-Khadamat, Ijārah Asset to be Leased, and Wakālah; with the crux of the four models is Ijārah Sukūk which combines two central Islamic contracts, i.e. sale and purchase contract (al-Bayʿ) and lease contract (al-Ijārah). The sale and purchase of state-owned assets in Indonesian sovereign sukūk issuance is limited to the beneficial right of the asset only (excluding the legal title of the asset). Likewise, the study positively contributes to the two fields, i.e., academic research and the finance industry (particularly Islamic finance involving government and private investors).

Customer welfare of Sharia microfinance institutions: Ease of access, product expertise, and the mediating role of service quality

2024-10-06T04:33:29+00:00

Baitul Maal wat Tamwil (BMT) is vital in developing Micro, Small, and Medium Enterprises (MSMEs). This paper examines the benefits of BMT for members regarding accessibility, product expertise, and service quality. This study was designed with quantitative methods using a survey by distributing questionnaires to 200 respondents gathered from five branch offices of BMT Bahtera, Pekalongan, Indonesia. This study employed path analysis to analyze the data. The study results demonstrate that accessibility, product expertise, and service quality significantly impacted consumer welfare. This result indicates that customer welfare is the primary factor in the growth of BMTs. Conversely, accessibility, product expertise, and service quality were significant for BMT growth and members’ welfare. This research contributes to BMT product quality improvement and ease of access to customer services by using technology to create effectiveness and efficiency.

Financial distress prediction in Islamic commercial banks: The role of gender, corporate social responsibility, and capital structure

2024-10-07T14:54:22+00:00

This research empirically tests the influence of women’s presence on the board of directors, Corporate Social Responsibility (CSR) expenditure, and capital structure on the likelihood of financial distress for a sample of 13 Islamic commercial banks in Indonesia from 2019 to 2022. The study employs regression to determine the impact of board gender diversity on financial distress. Altman Z-score model is used as a proxy for financial distress indicator. The result shows that the presence of female director can enhance the possibility of financial distress due to their excessive caution. In addition, CSR can also lead to financial difficulties for the entities because CSR implementations need substantial funding, and undue reliance on debt can also increase the risk of financial problems. These findings have significant implications for governance and risk management in Islamic commercial banks. They stress the need for a balanced approach to board gender diversity, avoiding excessive caution that could lead to financial strain. Banks should align CSR activities with their financial capacity to prevent undue burden and manage debt levels prudently to reduce financial distress. These insights can help policymakers and institutions improve governance, CSR strategies, and financial risk management, enhancing the stability of Islamic commercial banks.

Analysis of Indonesian Islamic banking performance using Sharia Maqasid Index and simple additive weighting rating

2024-10-08T15:18:00+00:00

This study aims to analyze the performance of Islamic Commercial Banks (ICB) and Islamic Banking Units (IBU) in Indonesia in 2021-2023 based on the Sharia Maqasid Index (SMI) and Simple Additive Weighting Rating (SAWR). Assessment of the performance of ICB and IBU in the Annual Report so far is only based on financial ratios, so it cannot evaluate the basic principles of Islamic banks. Therefore, the SMI and SAWR approaches are used to measure the performance of Islamic banks. The object of this research is 13 ICB and 20 IBU registered with OJK (Financial Services Authority). The results showed that the highest total score was Bank Mega Syariah (BMS) in 2021, Bank Panin Dubai Syariah (BPDS) in 2022 and 2023, IBU BPD Nagari (Sumatra Barat) in 2021 and 2023, and IBU BPD Jawa Timur in 2022. Each ICB and IBU has generally been able to carry out all of its objectives, namely Tahdzib al-fard (educating individuals), Iqamah al-adl (upholding justice), and Jabl al-Maslahah (Creating welfare). This research provides implications for further evaluation and development regarding the appropriate performance assessment of ICB and IBU and the following Sharia principles prioritizing the benefit of the people