Abstract
This study examines the association between Islamic banks' financial performance and the level of Islamic Social Responsibility (ISR) in supporting SDGs. The financial performance is measured by Islamic specific financial performance, including profit sharing financing ratio, zakat performance ratio, equitable distribution ratio, and director employee welfare ratio. The ISR disclosure is measured based on the Accounting and Auditing Organization for Islamic financial (AAOIFI) Governance Standard (GS) 1 and GS 7, consisting of 75 components of exposure in Islamic banks from Indonesia and Malaysia for the 2014-2018 period. This study uses regression analysis. From the analysis of the 90 annual reports, it was found that the level of ISR disclosure in Indonesia and Malaysia had diversity and superiority respectively over the dimensions of ISR disclosure. The content analysis results show that Indonesian Islamic banks have an average total superior exposure of 54% compared to Malaysian state Islamic banks of 47%. Regression tests prove a positive association between profit-sharing financial ratio and zakat performance ratio and the level of ISR disclosure. While the association between the equitable distribution ratio and director employee welfare ratio and the level of ISR disclosure is not proven.
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