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International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

The Influence of Islamic Governance Disclosure on Islamic Bank’s Financial Performance in Malaysia

Memiyanty Abdul Rahim, Nurul Farha Saadin, Muhammad Imran Mohd Tamrin

http://dx.doi.org/10.6007/IJARAFMS/v13-i2/18026

Open access

The influence of Islamic governance disclosure on Islamic banking financial performance in Malaysia is investigated in this study. Islamic banking is gaining popularity as a result of its ability to meet the needs of specific customers. However, as Islamic banking has grown, various new risks have evolved, such as the Shari’ah non-compliance risk. Such occurrences are due to a lack of oversight, control, and disclosed information, particularly in non-compliant matters. Every action, transaction, and procedure carried out by an Islamic bank should be compliant with the Shari’ah laws. These issues include incomplete disclosure of information, lax oversight, and weak governance, all of which influence businesses. The goal of this study is to determine the extent of influence the disclosure of Shari’ah governance has had on the financial performance of Islamic banks. This study used a sample size of 16 Islamic banks and is concentrated on Malaysia. Using a checklist created from the Shari’ah governance framework, secondary data is used and collected from yearly reports for the years 2017 through 2021. The checklist consists of five methods that are crucial for ensuring Shari’ah compliance and high-quality transparency in Islamic banking. The method used to gauge financial performance is the return on assets (ROA). In response to the research topic, this study also performed multiple regression analysis. According to this study, the only factors that significantly affect financial performance are the Shari’ah Committee and Shari’ah Risk. Both these processes are crucial in guaranteeing Islamic banking compliance in Malaysia.

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In-Text Citation: (Rahim et al., 2023)
To Cite this Article: Rahim, M. A., Saadin, N. F., & Tamrin, M. I. M. (2023). The Influence of Islamic Governance Disclosure on Islamic Bank’s Financial Performance in Malaysia. International Journal of Academic Research in Accounting Finance and Management Sciences, 13(2), 843–856.