Good Corporate Governance (GCG) and Sharia Compliance as Pillars of Sustainability in Islamic Banking: A Case Study of Bank Syariah Indonesia

Rani Chairunisa Br Tompul; Wahyi Busyro; Putri Jamilah

Authors

Rani Chairunisa Br Tompul Universitas Muhammadiyah Riau, Indonesia
Wahyi Busyro Universitas Muhammadiyah Riau, Indonesia
Putri Jamilah Universitas Muhammadiyah Riau, Indonesia

Keywords:

Good Corporate Governance (GCG), Sharia Compliance, Financial Performance, Sustainability, Islamic Banking

Abstract

Background: In the context of Islamic banking, Good Corporate Governance (GCG) transcends conventional financial regulatory compliance, establishing a unique and fundamental ethical framework for institutional sustainability. It is crucial to analyze how responsible governance, infused with the principle of Sharia Compliance, genuinely correlates with long-term financial health. Objective: This study aims to empirically analyze and prove the simultaneous influence of GCG implementation and Sharia Compliance on the Financial Performance of Bank Syariah Indonesia (BSI), as the largest Islamic banking entity in Indonesia, while reviewing its relevance as a governance model focused on Humanity and Sustainability. Method: The research employs a quantitative approach using secondary data from BSI's annual reports, utilizing regression analysis to test the relationship between GCG indicators (such as the composition of the board of directors/commissioners) and Financial Performance (ROA/ROE). Results: The findings indicate that effectively implemented GCG, particularly when strengthened by Sharia Compliance oversight, has a positive and significant influence on enhancing the bank's efficiency and profit stability. This discovery confirms that the ethics and transparency of Sharia governance serve as strong predictors for sustainable performance, rather than merely momentary profit. Conclusion: The implementation of GCG based on Sharia principles is an essential pillar that ensures accountability to stakeholders and society, offering an alternative model of Sustainable Finance that aligns with the ICHST theme.

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