Do Good Corporate Governance and Financing Risk Management Matter for Islamic Banks’ Performance in Indonesia?

Agustina Maulidar (Department of Islamic Economics, Faculty of Economics and Business, Syiah Kuala University, Darussalam, Banda Aceh, Indonesia)
M. Shabri Abd. Majid (Department of Islamic Economics, Faculty of Economics and Business, Syiah Kuala University, Darussalam, Banda Aceh, Indonesia)

ETIKONOMI
Vol 19, No 2 (2020)

The purpose of this study is to examine and analyze the influence of the implementation of Good Corporate Governance principles and financing risk management on the Islamic banks' performance in Indonesia over the 2010-2019 period. 11 full-pledge Islamic Banks (BUS) was selected as the study sample using the purposive sampling technique and analyzed using the panel multiple regression techniques. The study found that Good Corporate Governance (GCG) and Financing to Deposit Ratio (FDR) positively influence the Islamic banks' performance. In contrast, Non-Performing Financing (NPF) has a negative influence on Islamic banks' performance. These findings imply that to promote the performance further, the Islamic banks should enhance the implementation of GCG principles and minimize NPF by improving financing risk management and enhance their financing by allocating their existing funds to the bankable and productive economic sectors.JEL Classification: G21, G34How to Cite:Maulidar, A., & Majid, M. S. A. (2020). Do Good Corporate Governance and Financing Risk Management Matter for Islamic Banks’ Performance in Indonesia?. Etikonomi: Jurnal Ekonomi, 19(2), 169-184. https://doi.org/10.15408/etk.v19i2.15080.