THE IMPACT OF THE SUPERVISORY STRUCTURE ON THE FINANCIAL PERFORMANCE OF SHARIA RURAL BANKS IN INDONESIA

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Abstract

This study aims to determine the criteria effect of the Commissioners Board and the Sharia Supervisory Board on financial performance with Good Corporate Governance as an intervening variable on Sharia Rural Bank in Indonesia.

This research uses a quantitative approach with path analysis method and targets the population of Sharia Rural Bank throughout Indonesia. The independent variables of this study are the Commissioner’s Board and the Sharia Supervisory Board while financial performance with the proxy of Non-Performing Financing is identified as the dependent variable, and Good Corporate Governance as an intervening variable. The findings show that: the criteria of the commissioner’s board have a positive effect on Good Corporate Governance; the criteria of the Sharia Rural Bank have a positive effect on Good Corporate Governance; the criteria of the Commissioners Board and the Sharia Supervisory Board do not have a significant effect on financial performance, and Good Corporate Governance does not have an effect on financial performance. This research can potentially be used a reference point by the Sharia Rural Bank in Indonesia and the Financial Services Authority regulators in the formulation of rules regarding the criteria of the Commissioners Board and Sharia Rural Bank. Through this research, it is recommended that that the Sharia Rural Bank can form a Commissioners Board and Sharia Rural Bank professionally to increase the Good Corporate Governance and financial performance of the Sharia Rural Bank.

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Published

2021-04-01