Driving Financial Performance in Islamic Banking: Ethical Governance, Social Responsibility, and the Power of Intellectual Capital

Abstract

Purpose – This study aims to examine the effect of Islamic Corporate Governance (ICG), Islamic Corporate Social Responsibility (ICSR), and Corporate Zakat on the financial performance of Islamic Commercial Banks (ICBs) in Indonesia, as well as to investigate the moderating role of Intellectual Capital.

Design/methodology/approach – This study employs a quantitative approach using secondary data obtained from the financial statements and annual reports of Islamic Commercial Banks (ICBs) in Indonesia over the period 2022–2024. The data are analyzed using EViews version 9.

Findings – The results indicate that Islamic Corporate Governance (ICG) and Islamic Corporate Social Responsibility (ICSR) do not have a significant direct effect on financial performance. In contrast, Corporate Zakat and Intellectual Capital have a significant positive effect on financial performance. Furthermore, Intellectual Capital is empirically proven to act as a significant moderating variable (quasi-moderator) that strengthens the relationship between Islamic Corporate Governance (ICG), Islamic Corporate Social Responsibility (ICSR), and Corporate Zakat with financial performance. These findings suggest that the contribution of ICG and ICSR to financial performance becomes more meaningful when supported by effective management of Intellectual Capital.

Research limitations/implications – This study is limited to Islamic Commercial Banks (ICBs) in Indonesia during the 2022–2024 period. Future research is encouraged to extend the observation period, increase the sample size, and incorporate additional variables to provide a more comprehensive understanding of the determinants of financial performance in Islamic Commercial Banks.

 JEL : G21, G34, M14, Z12, O34.