The Role of Islamic Corporate Governance in Mediating the Effect of Sharia Supervisory Board and Financing to Deposit Ratio on Non-Performing Financing

Rizky Aditya Nugraha

Abstract


This study aims to examine the mediating effect of Islamic corporate governance (ICG) on the relationship between dividend payout ratio (DPS) and financing to deposit ratio (FDR) with Islamic financing risk. This study uses panel data from 12 Islamic commercial banks in Indonesia during the period 2016-2021. The analytical method used is multiple linear regression with the Sobel test to test the mediation effect. The results showed that DPS has a positive effect on Islamic financing risk while FDR has no effect on Islamic financing risk. Then ICG has a negative effect on the risk of Islamic financing. In addition, the Sobel test results show that ICG partially mediates the effect of DPS and FDR on Islamic financing risk. This finding implies that good ICG practices can reduce the negative impact of DPS and FDR on Islamic financing risk.

Keywords


Islamic corporate governance; Sharia supervisory board; Financing to deposit ratio; Islamic financing risk

References


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