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The Moderating Role of Corporate Social Responsibility in Determining Islamic Bank Margin

Author

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  • Handayani, Yuniorita Indah

    (Yuniorita Indah Handayani* STIE Mandala Jember Sumatera 118-120 street, Jember Regency INDONESIA +628124984456)

  • Fadah, Isti

    (Faculty of Economic and Business University of Jember Kalimantan street, Jember Regency INDONESIA)

  • Utami, Elok Sri

    (Faculty of Economic and Business University of Jember Kalimantan street, Jember Regency INDONESIA)

  • Sumani,

    (Faculty of Economic and Business University of Jember Kalimantan street, Jember Regency INDONESIA)

Abstract

The ability to generate profit is the most important factor for a bank. One of the indicators to asses bank profitability is Bank Margin which is influenced by internal and external factors. However, the survival of a bank does not only depend on the profitability, but also depends on its responsibility to the stakeholders including the community. Islamics bank are obliged to distribute some of their profits to support Corporate Social Responsibility (CSR) and disclose those activities in the bank annual report. This study aims to analyze internal factors that determining Islamic Bank Margin in Malaysia. The internal factors include capital, assets quality, management, earning and liquidity. This study further investigates the moderating role of CSR on the relationship between capital, asset quality, management, earning, liquidity and bank margins. The sample used are 10 Malaysian Islamic Banks. The method used is multiple regression. The findings show that 75.8% of Islamics Bank Margin is influenced by capital, asset quality, management, earning and liquidity. Partially, assets quality and earning significantly influence on Islamic Bank Margin, while capital, management and liquidity have no effect on bank margins. In addition, CSR is the potential variable to moderate the influence of capital, asset quality, management, and liquidity on Bank Margins.

Suggested Citation

  • Handayani, Yuniorita Indah & Fadah, Isti & Utami, Elok Sri & Sumani,, 2020. "The Moderating Role of Corporate Social Responsibility in Determining Islamic Bank Margin," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(1), pages 97-110.
    • Handle: RePEc:ukm:jlekon:v:54:y:2020:i:1:p:97-110
    DOI: http://dx.doi.org/10.17576/JEM-2020-5401-7
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    References listed on IDEAS

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    1. Haron, Sudin, 1996. "Competition And Other External Determinants Of The Profitability Of Islamic Banks," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 4, pages 49-64.
    2. Ahmed Arif & Ahmed Nauman Anees, 2012. "Liquidity risk and performance of banking system," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 20(2), pages 182-195, May.
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