Equity-Based Financing and Corporate Governance: Evidence from Islamic Banks in Indonesia

Document Type : Research Paper

Authors

1 Faculty of Economics and Business, Universitas Negeri Semarang, Indonesia

2 Faculty of Economics and Business,, Universitas Negeri Semarang, Indonesia

3 Faculty of Economics, Universitas Negeri Jakarta, Indonesia

4 Faculty of Economics and Business Education, Universitas Pendidikan Indonesia, Indonesia

Abstract

Equity-based financing (EBF) is a contract that promotes justice, and spirituality, and is aligned with Shariah values. However, EBF in Islamic banks (IB) is lower than in debt-based financing (DBF). This study aims to demonstrate the importance of the characteristics of the board of directors (BOD) and the Shariah Supervisory Board (SSB) in the distribution of EBF. This study examines 14 IBs from 2009 to 2020, yielding 153 bank-years. This study found that the education level of the members of the SSB increased EBF. Independent BOD and the size of the SSB reduced EBF. However, when the sample is divided based on ownership, IB that are owned by state/regional government-owned conventional banks (hereafter SOCB) or private-owned conventional banks (hereafter POCB) produce different research outcomes. In SOCB, the SSB plays a larger role in increasing EBF than it does in POCB.

Keywords

Main Subjects

References

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Interdisciplinary Journal of Management Studies (Formerly known as Iranian Journal of Management Studies)
Volume 17, Issue 2
April 2024
Pages 441-453

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