Volume 4, Number 4, April 2023 e-ISSN: 2797-6068 and p-ISSN: 2777-0915
DETERMINANTS
OF ISLAMIC SOCIAL REPORTING (ISR) DISCLOSURE ON FINANCIAL PERFORMANCE IN SHARIA
BANKING
Hilwa Fitri Millenia,
Asyari Hasan
Universitas Islam Negeri (UIN) Syarif Hidayatullah Jakarta,
Indonesia
Email:
[email protected], [email protected]
|
KEYWORDS Retun on Asset (ROA); Islamic Social Reporting
(ISR) |
ABSTRACT This study aims to
examine the effect of Islamic Social Reporting (ISR) disclosures on financial
performance. The dependent variable used in this study is financial
performance as measured by Return on Assets (ROA). The independent variable
in this study is Islamic Social Reporting (ISR). The population in this study
is the Islamic banking industry registered with the Financial Services
Authority (OJK) for the 2011-2020 period. The sample in this study were 8
Islamic banks selected using purposive sampling method. This study uses panel
data linear regression analysis as a data analysis tool. The statistical tool
used was Eviews 9. The results showed that
disclosure of Islamic social reporting had a significant positive effect on
return on assets (ROA) with a prob value of 0.0102
or less than 0.05. So that ISR can be used to predict ROA with a positive
coefficient direction, meaning that if ISR increases, ROA will increase,
which means that financial performance will increase. |
INTRODUCTION
The development of Islamic banking
in Indonesia has become a benchmark for the success of the existence of the
Islamic economy. The growth performance of Islamic banking financing has always increased, even during the
pandemic period. This can be proven based on OJK data, Islamic bank financing
rose 8.08% to Rp394.6 trillion at the end of 2020, while third party funds
reached Rp475.5 trillion, up 11.80% on an annual basis. In addition, the
quality of financing is also getting better with the ratio of non-performing
financing down 3 basis points on an annual basis to 3.08%. The capital adequacy
ratio is at the level of 21.59% with the financing to deposits ratio at 82.4%,
which shows the ability to expand this year is getting bigger. In addition, the
market share of Islamic banking has consistently increased from year to year.
The number of third party fund accounts (DPK) has
increased by 3.15 million accounts since December 2019. Positive growth has
also occurred on the asset side and disbursed financing (PYD). (Kusjuniati, 2020).
Islamic
banking is not only concerned with profit alone in maintaining its performance
but also pays attention to social aspects. (Abdel Karim, 1990)
states that the establishment of Islamic banks is in order to achieve falaah (success in this world and the
hereafter). Banks must continue to ensure the continuity of operations in their
business in terms of profit. However, that does not mean forgetting the
contribution in improving the welfare of the community or it can be referred to
as the company's code of ethics. One form of the social role of Islamic banking
is the existence of qard al-hasan (benevolent funds), the implementation of the
receipt and distribution of zakat, infaq, sadaqoh (ZIS) funds and the priority of financing the
profit-sharing principle in the form of mudharabah
and musyarakah.
Efforts
to achieve prosperity and wealth to generate profits is to improve financial
performance. Assessment of financial performance is one way that can be done by
Islamic banking in order to fulfill its obligations to funders and also to
achieve the goals that have been set. The main measuring tool for evaluating
financial performance through the results of calculations from financial
statements is the profitability ratio.
The use of company performance measurement
indicators using financial ratios alone certainly has weaknesses. Islamic
banking is different from conventional banking both in practice and theory, it
is necessary to change the paradigm of the form of performance measurement not
only limited to financial ratios (stakeholder orientation). For this reason, an
analytical tool is needed to determine the performance of Islamic banking in
Indonesia, especially to assess performance from the point of view of sharia
values applied in daily sharia banking operations (Prasetyowati & Handoko, 2016).
In Law no. 21 of 2008 concerning Islamic Banking, Islamic Banks and UUS can
carry out social functions, namely receiving funds from zakat, infaq, alms or other social funds and channeling them to
waqf managers (nazhir) according to the will of the
giver of the role of Islamic banking in the distribution of the economic
welfare of the people. .
CSR disclosure is the disclosure of
information regarding the entity's activities related to the entity's social
environment which is carried out through the media of its annual report.
Measurement of CSR in Islamic banking still refers to the Global Reporting
Initiative Index (GRI Index). However, with the need for disclosure of social
performance in Islamic banking, a social disclosure standard that is in line
with sharia guidelines is needed, namely the Islamic Social Reporting Index (ISR). The ISR index is a
benchmark for the implementation of Islamic banking social responsibility which
contains a compilation of standard CSR items set by the AAOIFI (accounting
and auditing organizations of Islamic financial institution).
This ISR index is an extension of the social
responsibility report that includes people's expectations, where these
expectations are not only about the company's role in the economy, but also the
company's role in a spiritual perspective. Disclosure for Islamic banks is not
only to attract the hearts of the public or improve the image of Islamic banks,
but as a form of accountability that Islamic bank activities are in accordance
with Islamic law. With the disclosure of CSR carried out by Islamic banks, it
is expected to provide an understanding of the operational activities and products
offered by Islamic banks.
Behind
its strength, Islamic banks certainly have a negative record in dealing with
this pandemic crisis. Some of them are the decrease in margin with net
operating margin down to the level of 1.55% and operating expenses to operating
income of 83.63%. The market share is also still relatively low, in line with
the low Islamic financial literacy and inclusion, where it is still 0.93% for
the literacy index and 9.1% for sharia inclusion. Meanwhile, nationally, the
literacy index is 38.03% and financial inclusion is 76.19%. In addition, the
differentiation of sharia business models or products is still limited, the
technology adopted is not adequate, and the fulfillment of human resources is
not optimal (Iqbal, 2021).
So it can be said that measuring company performance using
financial ratios alone certainly has weaknesses. Therefore, the need for ISR to
measure the values of the sharia aspect in Islamic banking. However, there are
still many Islamic companies that use conventional CSR reporting standards.
Research related to the social performance of Islamic banks in Indonesia is
still relatively small. So that research on the ISR index is also still very
little done. Previous studies on the ISR index were mostly carried out by
Malaysian researchers. Therefore, this is a challenge for the author to conduct
research on the ISR index in this study.
Several previous studies related to this
research include (Millenia & Hasan, 2022)
in his research entitled "The Influence of Islamic Social Reporting on
Bank Performance (Study on Islamic Banking in Indonesia)" with the results
of research that ISR has a positive and significant influence on bank
performance by using MSI in Islamic banking in Indonesia. This is in accordance
with the research by Retnaningsih et.al (2019),
namely the disclosure of Islamic Social
Reporting (ISR) has a significant positive effect on Return on Assets
(ROA). However, this statement contradicts research conducted by Sofyan (Hadinata, Sembiring, Kusumasari, &
Herawan, 2016)
where Islamic Social Reporting (ISR) of Islamic banking in Indonesia has a
negative effect on return on assets and profit sharing ratio. Based on the description above, the
researcher will conduct a study with the title Determinants of
Disclosure of Islamic Social Reporting (ISR)
in Islamic Banking on Financial Performance.
Islamic Social Reporting (ISR)
Corporate
social responsibility (Corporate Social
Responsibility) based on the World Business Council for Sustainable
Development (WBCSD) is a form of action taken from the company's ethical
considerations directed at improving the economy, which is accompanied by improving the quality
of life for employees and their families, as well as improving the quality of
life. the life of the surrounding community and the wider community (Wibisono et al., 2007).
In line with the increasing implementation of
CSR in the context of Islam, the desire to make social reporting that is sharia
(Islamic Social Reporting or ISR)
also increases. There are two things that must be disclosed in an Islamic
perspective, namely full disclosure and social accountability (Fitria and Hartanti, 2010). Islam
has explained quite clearly about the rights and obligations for individuals as
well as for organizations based on the Qur'an and Hadith. This is because Islam
is a religion that completely regulates all aspects of human life on earth.
ISR was first initiated by Ross Haniffa in 2002 in his article entitled “Social Reporting
Disclosure: ISR was further developed more extensively by Rohana
Othman, Azlan Md Thani, and Erlane
K Ghani in 2009 in Malaysia and currently ISR is still being developed. by
subsequent researchers. According to (Haniffa, 2002)
there are many limitations in conventional social reporting, so he put forward
a conceptual framework for ISR based on sharia provisions. The ISR index is an
extension of social reporting that includes people's expectations not only
about the role of companies in the economy, but also the role of companies in a
spiritual perspective.
The ISR index is an index that contains CSR
standard items set by AAOIFI (Accounting and Auditing Organization for Islamic
Financial Institutions) which is then further developed by researchers
regarding CSR items that should be disclosed by an Islamic entity (Putra, 2013)
in (Khoirudin, 2013).
In line with (Raditya, 2012),
the ISR index used in this study was taken from previous studies, namely, (Haniffa, 2002)
made five themes for the disclosure of the ISR Index, namely Funding and
Investment Themes, Products and Services Themes, Employees Themes, Community
Themes, and Environmental Theme. Then developed by (Othman & Rebolj, 2009)
by adding one theme of disclosure, namely the theme
of Corporate Governance.
Islamic Bank Financial Performance
Performance is an achievement achieved by the
company in a certain period that reflects the level of health of the company (Suhardjono, 2002). So that financial performance is a description
of the company's financial condition in a certain period regarding aspects of
fund raising and distribution of funds which are usually measured by indicators
of capital adequacy, liquidity, and profitability (Jumingan, 2006).
Financial
performance is used to assess the financial condition and performance of the
company, the analysis requires several benchmarks used are ratios and indexes
that connect more than one financial data. In banking performance, the
financial condition of a bank is analyzed with financial analysis tools, so
that it can be known about the good and bad financial condition of a bank that
reflects work performance in a certain period.
Furthermore,
the financial performance that will be used in this study are Return on Assets
(ROA), and Return on Equity (ROE). This financial ratio was chosen on the
grounds that it is the final result of a number of policies and decisions taken
by the company. This ratio is important to know to what extent the company's
ability to generate profits.
Return
on Assets (ROA) is a supporting ratio in calculating profitability for Islamic
banks. This ratio is used to measure the success of management in generating
profits. ROA is calculated by dividing profit before tax by total assets. The
smaller this ratio indicates the lack of ability of bank management in terms of
managing assets to increase revenue and reduce costs. ROA is used to measure
the ability of bank management in obtaining overall profits from the total
assets owned (Lukman, 2009).
Legitimacy Theory
Legitimacy
theory is a condition or status that exists when a company's value system is in
line with a larger social value system of which the company is a part (Ulum, Ghozali, & Chariri, 2007). Legitimacy can be used as a discourse to
construct a company strategy, especially related to efforts to position itself
in favor of the company in the community. Good acceptance from the community
can help the company in achieving its goals, so as to ensure the survival of
the company. (Hadi, 2011)
also stated that community legitimacy is a strategic factor for companies in
order to develop the company in the future.
Firms usually seek to legitimize and
maintain relationships within the broader social and political environment in
which they operate, without such legitimacy, they will not survive, regardless
of how well they perform financially (Gray, Kouhy, & Lavers, 1995) in (Lanis & Richardson, 2012). Companies use their annual reports to
illustrate the impression of environmental responsibility, so that they are
accepted by the community. With the acceptance of the community is expected to
increase the value of the company so as to increase company profits. This can
encourage or assist investors in making investment decisions (Harsanti, 2011).
The
use of legitimacy theory in this study has the implication that the ISR
program is carried out by the company in the hope of getting positive values
and legitimacy from the community. This means that if the company gains
legitimacy from the community, then the company can continue to survive and
develop in the midst of the community and gain benefits in the future.
Effect of corporate ISR disclosure on ROA
The variable being tested is the disclosure
of Islamic Social Reporting (ISR) on
the financial performance of Islamic banking. Based on the stakeholder theory
that when companies meet various expectations of their stakeholders, they will
be better able to create extraordinary company performance (Freeman & Reed, 1983).
According to Anwar and Alfattani (2014) financial
performance describes the role in increasing the activities offered by Islamic
banks to investors. The transformation from several conventional banks to
Islamic banks has created a good reputation for investors through good ISR.
Disclosure
of Islamic Social Reporting is a variable that shows how much corporate social
responsibility is to the public. Where every activity agenda in ISR is able to
help the company in maintaining its image to the public. So that in the future
it will attract the attention of investors to invest their capital in the
company. Therefore, the more companies disclose their social responsibility, it
is expected that it will affect their financial performance (ROA).
Previous research on the effect of Islamic
social responsibility disclosure on financial performance as measured by ROA
has been conducted by (Harahap, Harmain, Siregar, &
Maharani, 2017) and (Dawam et al., 2016).
From the results of this study obtained empirical evidence that the disclosure
of corporate social responsibility has a positive effect on ROA. Based on the
description above, the hypotheses in this study are:
RESEARCH METHOD
This study
uses quantitative methods. This type of research aims to explain the
relationship between two or more variables. This study aims to analyze the
effect of the independent variable, namely the disclosure of Islamic Social Responsibility (ISR) on
the Financial Performance of Islamic Banks. Financial performance in this study
is projected by Return on Assets (RoA).
The
population in this study is Islamic Commercial Banks in Indonesia. The sample
selection technique in this study was carried out using purposive sampling
method. The criteria used to select the sample are:
1)
Sharia commercial bank registered with OJK
2)
Islamic commercial banks that publish
complete annual reports for the period 2011-2020
3)
Islamic commercial banks that disclose ISR
in the annual report for the period 2011-2020
4)
Islamic commercial banks that did not
suffer losses during the period 2011-2020
So based on these
criteria with a total population of 13 Islamic commercial banks, the research
sample obtained is 8 Islamic commercial banks. The amount of data per variable
(8 BUS x 10 years) is 80 data. The research samples are as follows:
Table 1
Research Sample
|
No |
CODE |
SHARIA COMMERCIAL BANKS |
|
1 |
BSM |
PT Bank
Syariah Mandiri |
|
2 |
BRI |
PT Bank
Bri Syariah |
|
3 |
BNI |
PT Bank
BNI Syariah |
|
4 |
MEGA |
PT Bank
Mega Syariah |
|
5 |
BCA |
PT Bank
BCA Syariah |
|
6 |
BTPN |
PT Bank
Btpn Syariah |
|
7 |
ACEH |
PT Bank
Aceh Syariah |
|
8 |
NTB |
PT Bank
NTB Syariah |
Variable Operational Definition
The
operational variables that will be used in the study to test the formulated hypotheses
are as follows.
1.
Dependent Variable
The dependent variable is the variable
that is influenced by the independent variable. The variable used in this study
is financial performance which is calculated using RoA.
RoA is the company's ability to generate profits in
the form of a percentage obtained by the company in managing its assets during
a period. The RoA can be calculated by the formula:
2.
Independent Variable
The independent variable in this study is
Islamic Social Reporting which is measured by six indicators using the same
measurement and comparison. The comparison uses the scoring method. Of the six
indicators, namely investment and finance, products and services, labor,
social, environment and organizational governance, 53 items will be developed.
Each item disclosed in the annual report will be assigned a number 1 and if it
is not disclosed it will be assigned a value of 0. The formula for measuring
the extent of disclosure is:
Panel Data Linear Regression
Analysis
Panel Data Regression is a
combination of cross section data and time series data, where the same cross
section unit is measured at different times. So in
other words, panel data is data from the same individuals who are observed over
a certain period of time. Estimation of parameters in regression analysis with
cross section data is carried out using the least squares estimation method or
called Ordinary Least Square (OLS).
Testing
the hypothesis about the significance of the effect of ISR on Financial
Performance (RoA) with the equation:
Information:
Y
: ISR
i : 1st Entity
t
: Period 1
e
: Error
There are several approaches
to determine
the best panel data regression model , namely:
1.
Estimating Common Effect models, Fixed
Effect models and Random Effect models
2.
Determining the best model through Chow
test, Langrange Multiplier (LM) test and Hausman test
3.
Perform classical assumption test, namely
normality test, multicollinearity test, heteroscedasticity test, and
autocorrelation test
Test
the significance of the panel data regression parameters, namely the
Coefficient of Determination, t-Statistical Test and F
.Statistical Test
RESULTS AND
DISCUSSION
Data analysis
There
are eight banks sampled in this study, namely: Mandiri
Syariah Bank, BRI Syariah Bank, BNI Syariah Bank, Mega Syariah Bank, BCA
Syariah Bank, BTPN Syariah Bank, Aceh Syariah Bank, and NTB Syariah Bank. With
eight banks being sampled, 40 observations during 2011-2020 were used in this
study.
1.
Financial performance
Financial performance is projected with
ROA calculated from net income divided by total assets. The following is a
table of ROA calculation results from company samples during the 2011-2020
period:
Table 2
ROA (%) Islamic Bank
|
No |
Code |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
1 |
BSM |
1.95 |
2.25 |
1.53 |
0.17 |
0.56 |
0.59 |
0.59 |
0.88 |
1.69 |
1.65 |
|
2 |
BRI |
0.20 |
0.88 |
1.15 |
0.08 |
0.77 |
0.95 |
0.51 |
0.43 |
0.31 |
0.81 |
|
3 |
BNI |
1.29 |
1.48 |
1.37 |
1.27 |
1.43 |
1.44 |
1.31 |
1.42 |
1.82 |
1.33 |
|
4 |
MEGA |
2.29 |
2.74 |
1.14 |
1.16 |
1.97 |
2.36 |
2.24 |
2.47 |
2.90 |
3.64 |
|
5 |
BCA |
0.90 |
0.80 |
1.00 |
0.80 |
1.00 |
1.10 |
1.20 |
1.20 |
1.20 |
1.10 |
|
6 |
BTPN |
4.40 |
4.70 |
4.50 |
4.23 |
5.24 |
9.0 |
11.2 |
12.4 |
13.58 |
7.16 |
|
7 |
ACEH |
2.91 |
3.66 |
3.44 |
3.13 |
2.83 |
2.48 |
2.51 |
2.38 |
2.33 |
1.73 |
|
8 |
NTB |
5.71 |
5.62 |
5,10 |
4.65 |
4.27 |
3.95 |
2.45 |
1.92 |
2.56 |
1.74 |
Data source: IDX 2011-2020, secondary data (processed data)
From the table above, it can be seen that
the ROA of the company samples fluctuates every year. The lowest ROA in 2014,
was at BRI Syariah at 0.08% and the highest was at BTPN Syariah at 13.58% in
2019. The highest average ROA from 2011 to 2020 was also at BTPN Syariah at
7.64 % and the lowest average ROA also lies with BRI Syariah at 0.61%.
2.
Islamic Social Reporting (ISR)
In the table below, it can be seen that
disclosure based on ISR has increased from year to year, but for banks that
make disclosures based on the average ISR index the highest is done by Islamic
NTB banks at 87%. Meanwhile, the lowest ISR disclosure of 60.59% was carried
out by Aceh Syariah banks.
Table 3
Islamic Social Reporting (ISR) Islamic
Banks
|
No |
Code |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
1 |
BSM |
0.850 |
0.910 |
0.829 |
0.512 |
0.705 |
0.887 |
0.925 |
0.925 |
0.943 |
0.943 |
|
2 |
BRI |
0.421 |
0.930 |
0.950 |
0.503 |
0.882 |
0.830 |
0.566 |
0.906 |
0.887 |
0.925 |
|
3 |
BNI |
0.823 |
0.860 |
0.829 |
0.825 |
0.853 |
0.868 |
0.830 |
0.868 |
0.849 |
0.887 |
|
4 |
MEGA |
0.736 |
0.755 |
0.636 |
0.638 |
0.726 |
0.755 |
0.736 |
0.811 |
0.811 |
0.811 |
|
5 |
BCA |
0.698 |
0.774 |
0.775 |
0.774 |
0.775 |
0.698 |
0.774 |
0.755 |
0.755 |
0.755 |
|
6 |
BTPN |
0.509 |
0.566 |
0.572 |
0.442 |
0.660 |
0.509 |
0.566 |
0.642 |
0.642 |
0.660 |
|
7 |
ACEH |
0.655 |
0.786 |
0.761 |
0.711 |
0.683 |
0.755 |
0.736 |
0.811 |
0.811 |
0.830 |
|
8 |
NTB |
0.998 |
0.974 |
0.916 |
0.877 |
0.871 |
0.698 |
0.774 |
0.755 |
0.755 |
0.755 |
Data source: idx 2011-2020, secondary
data (processed data)
Descriptive Statistical Analysis
Statistical
descriptive analysis was used to describe the data for each research variable
including Financial Performance (ROA) and ISR. The table shows the minimum,
maximum, mean, and standard deviation values for each research variable.
Table 4
Descriptive Statistical Analysis
|
|
Y |
X |
|
mean |
2.323000 |
0.752625 |
|
median |
1.670000 |
0.780500 |
|
Maximum |
13.58000 |
0.998000 |
|
Minimum |
0.080000 |
0.210000 |
|
Std. Dev. |
2.103615 |
0.157823 |
|
Skewness |
2.604479 |
-1.274542 |
|
Kurtosis |
12.63534 |
4.961852 |
|
Jarque-Bera |
399.9104 |
34,48899 |
|
Probability |
0.000000 |
0.000000 |
|
Sum |
185.8400 |
60.21000 |
|
Sum Sq. Dev. |
349.5905 |
1.967735 |
|
Observations |
80 |
80 |
Source:
Secondary Data, Output Eviews 9
From
the descriptive statistical tests presented in the table, the results are as
follows:
1.
Financial performance (ROA) has the lowest
value of 0.080000 and the highest value of 13.58000 with an average value of 2.323000 and a standard deviation of 2.103615
2.
ISR has the lowest value of 0.210000 and the highest value of 0.998000 with an average value of 0.752625 and a standard deviation of 0.157823
Classic assumption
test
Classical
assumption testing in this study includes data normality test,
multicollinearity test ,
heteroscedasticity test, and autocorrelation test.
1.
Data Normality Test
The
normality test was conducted to determine the normality of the data
distribution for each research variable. The normality test was conducted to
determine whether the variables in this study were normally distributed or not.
Figure 1. Normality test
Source: Secondary
Data, Output Eviews 9
It
can be seen in the table that the value of Sig.
for Standardized residual is 0.940824. Then the value of Sig>
2.
Multicollinearity Test
Multicollinearity
is a situation where there is a strong correlation between one independent
variable and the other independent variables in regression analysis. If
multicollinearity is detected in the analysis, the estimated regression
coefficient number obtained has a value that is not in accordance with the
substance, so that it can mislead interpretation. In addition, the standard error value of each regression
coefficient can be infinite.
Table 5
Multicollinearity Test
|
Variable |
Uncentered |
Centered |
|
|
VIF |
VIF |
|
X |
1.0000000 |
1.0000000 |
Source:
Secondary Data, Output Eviews 9
The
model is said to be free from multicollinearity if the VIF value is <10.
From table 10 it can be seen that the calculation of the Variance Inflation Fact or (VIF) value shows that none of the
independent variables has a VIF value of more than 10 so it can be concluded
that there is no multicollinearity between the independent variables. (independent variable).
3.
Heteroscedasticity Test
The heteroscedasticity test aims to test
whether in the regression model there is an inequality of variance from
the residuals of one observation to another observation.
Table 6
Heteroscedasticity Test
|
Variable |
Coefficient |
Std. Error |
t-Statistic |
Prob. |
|
C |
0.536970 |
0.774066 |
0.693701 |
0.4899 |
|
X |
1.292858 |
0.878301 |
1.471999 |
0.1450 |
Source: Secondary Data, Output Eviews 9
The results of the glejser
test show that the probability value of the independent variable is 0.1350
which is greater than Alpha (0.05), so it can be concluded that there is no
heteroscedasticity problem in this data.
4.
Autocorrelation Test
This assumption test is conducted to determine
whether in a linear regression model there is a correlation between the
confounding error in period t and the error in the previous t-1.
Autocorrelation arises because related observations over time are related to
each other.
Table 7
Autocorrelation Test
|
R-squ ared |
0.081962 |
Mean
dependent var |
0.586630 |
|
|
Adjusted
R-squared |
0.070192 |
SD dependent var |
1.463734 |
|
|
SE
of regression |
1.411428 |
Sum squared resid |
155.3860 |
|
|
F-statistics |
6.963795 |
Durbin-Watson
stat |
1.982428 |
|
|
Prob(F-statistic) |
0.010039 |
|
|
|
Source:
Secondary Data, Output Eviews 9
The
assumption of autocorrelation is violated if the Durbin-Watson number is
<1.6 and >8.3. Meanwhile, from the results of data processing shown in
the table, the Durbin-Watson number is 1.982428 which is
between 1 and 8, it can be interpreted that there is no positive or negative
autocorrelation in the regression model. So that the assumption of
autocorrelation is met.
Model
Testing on Panel Data
Panel
data model testing basically has three forms, namely pooled, fixed effects and
random effects. To select the method to be used, it is necessary to carry out 3
(third) tests, namely the Chow test with the rendundant
test, the Hausman test, and the Lagrange multiplier test. After performing the
three tests, the best model that was selected and used in this study was the
random effect model which had also been tested for classical assumptions.
Table 8
Panel Data Linear Regression
|
Dependent Variable: Y |
|
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Method: Panel EGLS
(Cross-section random effects) |
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Date: 04/24/22 Time:
14:43 |
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Samples: 2011 2020 |
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Periods included: 10 |
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Cross-sections
included: 8 |
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Total panel
(balanced) observations: 80 |
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Swamy and Arora
estimator of component variances |
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Variable |
Coefficient |
Std. Error |
t-Statistic |
Prob. |
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C |
0.028581 |
1.073631 |
0.026621 |
0.9788 |
|
X |
3.048555 |
1.158379 |
2.631742 |
0.0102 |
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Effects
Specification |
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SD |
Rho |
|
Cross-section
random |
1.714801 |
0.5948 |
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Idiosyncratic
random |
1.415267 |
0.4052 |
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Weighted
Statistics |
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R-squared |
0.081962 |
Mean
dependent var |
0.586630 |
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Adjusted
R-squared |
0.070192 |
SD dependent var |
1.463734 |
|
|
SE
of regression |
1.411428 |
Sum squared resid |
155.3860 |
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F-statistics |
6.963795 |
Durbin-Watson
stat |
1.982428 |
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Prob(F-statistic) |
0.010039 |
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Source:
Secondary Data, Output Eviews 9
Based on table Coefficients above could seen score Constant _ is 0.028581 and the value of X is 3.048555. The value could substituted with equality regression double as following:
ROA = 0.028581 + 3.048555 (ISR)
From the equation the above regression, can is known that :
a) Constant as big as 0.028581 states that if value of variable free ignored or is 0, then value (Y) is 0.028581.
b) The coefficient of regression equation (X) is 3.048555 state that every increase in X, 1 unit then (Y) will be increase as big as 3.048555 times.
T . Statistical Test
This test
was conducted to test the significance of the coefficients of each independent
variable partially or simultaneously on the dependent variable. That is the
effect of the independent variable ISR X on dependent
variable ROA (Y). The table above shows that the ISR variable has
a positive and significant effect on ROA because
the prob value is 0.0102 or
less than 0.05.
F .
Statistical Test
In the table above there is Column Prob (F-statistic) which is significance value a double effect between variables or a simultaneous effect or together regression model, obtained the value of Sig. = 0.000000. Based on results calculation, get results that research sig 0.010039 < 0.05, this case show that the ISR variable has an effect significant to the ROA variable.
Coefficient
of Determination Analysis
Is known that number R - Square of 0.081962. The
figure states that variance var i ab el ROA can explained or influenced by variable ISR is 8.19%, while the other
91.81 % is determined by
other variables that are not explained in this study.
The Effect of Islamic Social Reporting Index on Return
on Assets (ROA)
The first test in this study is to
examine the effect of Islamic Social
Reporting (ISR) in Islamic banking on financial performance as proxied by
ROA. The results of the t hypothesis test can be seen in the table that the
Islamic Social Reporting Index variable in Islamic banks has a significance
level of 0.0000 with a coefficient of 1.658070.
Table 9
Hypothesis Test t
|
Variable |
Coefficient |
Std. Error |
t-Statistic |
Prob. |
|
C |
0.028581 |
1.073631 |
0.026621 |
0.9788 |
|
X |
3.048555 |
1.158379 |
2.631742 |
0.0102 |
Source: Output Eviews 9
From these
numbers, it can be interpreted that the Islamic Social Reporting Index has a
positive influence on ROA. These results are consistent with the initial
hypothesis which states that the ISR variable has a significant positive effect
on ROA. So that the ISR can be used to predict ROA with a positive coefficient
direction, meaning that if the ISR increases, the ROA will increase, which
means that financial performance will increase.
The results of this study are in accordance
with the hypothesis and research conducted by (Harahap et al., 2017)
and (Arshad, Othman, & Othman, 2012)which
state that Islamic Social Reporting (ISR)
has an effect on financial performance as proxied by Return On Assets (ROA),
which finds that the company's good Banking through the disclosure of social
responsibility received a positive response by the public as reflected in the
existence of a significant and positive relationship between social performance
and financial performance.
This
proves that investors are long-term oriented and consider the disclosure of
social responsibility in investing in banking companies in 2011-2020. And with
the issuance of Law No. 21 of 2008 article 7 which states that the legal form
of Islamic banks is a Limited Liability Company so that in terms of social and
environmental responsibility, Islamic banks must refer to Law No. 40 of 2007
which in this study turned out to affect the activity of disclosure of
responsibility. social responsibility in banking companies. In addition, the
disclosure of social responsibility (ISR) is a variable that shows how much
corporate social responsibility is to the public. Where every activity agenda
in ISR is able to help the company in maintaining its image to the public. So
that in the future it will attract the attention of investors to invest in the
company. Therefore, the more companies disclose their social responsibility, it
is expected that it will affect their profitability (ROA).
CONCLUSION
Study this conclude that ISR disclosure is influential positive
significant to performance proxied finance with ROA. The more
large disclosure of Islamic Social Reporting, then could increase
profitability company as measured by ROA. The result in accordance with theory
legitimacy that explains that when company To do
activity social will impact on the company's image (value creation) in the form
of positive social value that can support operational processes companies that
have an impact on increasing profit company. As includes in component The basis of CSR is cover welfare or prosperity economy,
increase quality environment and justice social.
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Copyright holders:
Hilwa Fitri
Millenia, Asyari Hasan (2023)
First publication right:
Devotion - Journal of Research and Community
Service
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