Innovation and the Characteristics of Board of Directors on the Performance of Islamic Banks in Indonesia

Abstract

This study examines how board characteristics and innovation affect the performance of Islamic banks in Indonesia. It analyzes panel data from 12 banks, observed from 2010 to 2020, using secondary data and quantitative methods. The results show that a board's educational background in business negatively impacts bank performance. In contrast, both board size and innovation have positive effects. Innovation also strengthens the positive link between a board's business education and bank performance. However, it does not moderate the effect of gender diversity on performance. Instead, it moderates the negative relationship between board size and performance. While providing valuable insights, this study is limited by data availability and its focus on the Indonesian Islamic banking sector. Future research should consider additional factors and a broader context to provide a more complete understanding. This can help guide the development of strategies and policies for Islamic banks. Additionally, exploring the role of regulatory frameworks and market conditions could offer deeper insights into the dynamics of bank performance.

Received: 24 July 2024 | Revised:  18 November 2024 | Accepted: 24 December 2024

Conflicts of Interest 

The authors declare that they have no conflicts of interest to this work.

Data Availability Statement

The data that support this work are available upon reasonable request to the corresponding author.

Author Contribution Statement

Fhatimah Nur Prawati: Conceptualization, Validation, Investigation, Writing - original draft. Sepya Catur Wulandari: Formal analysis. Nur Wahyuningsih: Resources, Project administration. Samsul Rosadi: Methodology, Software, Writing - review & editing. Ade Setiawan: Supervision, Funding acquisition. Dewi Nurul Mardiana: Data curation, Visualization.