Presenters: Nur Wahyuningsih, Devi Narulitasari
Affiliation: UIN Raden Mas Said Surakarta
Room: 9
ICIES News- At the 4th International Conference on Islamic Economics Studies (ICIES) 2024, held in Room 9, researchers Nur Wahyuningsih and Devi Narulitasari from UIN Raden Mas Said Surakarta presented their compelling study titled “The Influence of Board of Directors and Sharia Supervisory Board on Zakat Funds in Islamic Banks in Indonesia.” This research addresses a critical issue in Islamic banking: the management and distribution of zakat funds.
Islamic banks often face criticism for not fulfilling their social responsibility commitments, particularly in managing zakat. Wahyuningsih and Narulitasari’s study aimed to explore how corporate governance affects the distribution of zakat funds in Indonesian Islamic banks. The research focused on two primary governance features: the sharia supervisory board and the board of directors.
Using panel data regression analysis with EViews 12, the study examined annual reports from Indonesian Islamic banks over the period from 2016 to 2022. The findings revealed a nuanced picture of governance’s impact on zakat management. Specifically, the size of the Board of Directors was found to have no significant effect on zakat funds. In contrast, both the remuneration of the Directors and the reputation of the Sharia Supervisory Board positively influenced the distribution of zakat funds. Interestingly, the size of the Sharia Supervisory Board had a negative impact on zakat funds.
These results contribute to the literature on corporate governance by providing empirical evidence on how governance mechanisms can enhance the social performance of Islamic banks. Wahyuningsih and Narulitasari emphasized the practical implications of their findings, suggesting that Islamic banks seeking to improve their social performance, particularly in terms of zakat fund management, should consider maintaining a sharia supervisory board with a strong reputation and offering competitive remuneration to their directors.
The presentation highlighted the importance of effective governance in fulfilling the social responsibilities of Islamic banks, providing valuable insights for policymakers, bank management, and scholars in the field of Islamic economics.