Islamic banks in Indonesia disclose social responsibility information unevenly, with financial capacity and internal governance playing decisive roles. This conclusion comes from a 2025 peer-reviewed journal article written by Risty Nandaditya of Universitas Tanjungpura, together with Muhsin, Muhammad Fahmi, Nina Febriana Dosinta, and Syarif Muhammad Helmi from Universitas Tanjungpura. Published in the International Journal of Finance and Business Management (IJFBM), the article analyzes recent academic evidence on Islamic Social Reporting (ISR) and explains why disclosure practices remain inconsistent across Indonesia’s Islamic banking sector. The findings matter because ISR is closely linked to transparency, public trust, and the ethical identity of Islamic finance.
Islamic banking continues to grow in Indonesia,
supported by policy encouragement and rising public interest in
Sharia-compliant finance. However, growth in assets and customers has not
always been matched by growth in transparent social reporting. Unlike
conventional corporate social responsibility frameworks, Islamic Social
Reporting is rooted in Islamic principles, emphasizing accountability not only
to stakeholders but also to moral and religious values. When disclosure is weak
or inconsistent, banks risk losing credibility among customers who expect
Islamic institutions to uphold higher ethical standards.
Why Islamic Social Reporting
Matters
Islamic
Social Reporting covers information on social contributions, environmental
responsibility, employee welfare, community development, and Sharia compliance.
For Islamic banks, ISR serves as a public signal that business activities align
with Islamic values such as justice, transparency, and social welfare.
In
Indonesia, ISR disclosure remains largely voluntary. This regulatory gap
creates wide variation in reporting quality. Some Islamic banks publish
detailed social responsibility sections, while others provide minimal
information. According to the authors, this inconsistency reduces comparability
and weakens the overall credibility of the Islamic banking industry.
The
article places ISR within a broader social and policy context. Public
expectations for ethical finance are rising, and regulators increasingly
emphasize transparency and sustainability. Against this backdrop, weak ISR
practices represent a missed opportunity for Islamic banks to differentiate
themselves and strengthen public confidence.
How the Study Was Conducted
Rather than collecting new survey or financial data,
the authors conducted a systematic literature review. They analyzed 35
peer-reviewed journal articles published between 2020 and 2025 that
examined determinants of Islamic Social Reporting disclosure in Indonesian
Islamic banks.
The review identified recurring variables, compared
findings across studies, and highlighted patterns and contradictions in the
existing research. This approach allowed the authors to map the overall
direction of ISR research in Indonesia and to identify which factors most consistently
influence disclosure practices.
The methodology is straightforward and transparent.
By synthesizing recent academic work, the article provides a consolidated view
of ISR disclosure drivers without relying on complex statistical explanations.
Key Findings from Recent Research
The review highlights several consistent findings
that explain why some Islamic banks disclose more social information than
others.
Financial capacity plays a central role. Banks with higher profitability
and larger asset size tend to disclose ISR more extensively. Larger banks face
greater public scrutiny and usually have more resources to prepare
comprehensive social reports.
Company size is the most consistent predictor. Across the reviewed studies,
bank size shows the strongest and most stable relationship with ISR disclosure.
Large Islamic banks are more likely to publish detailed social responsibility
information than smaller institutions.
Results on profitability and leverage are mixed. Some studies find that higher
profits encourage disclosure, while others report no significant relationship.
The same inconsistency appears with leverage. These mixed results suggest that
financial performance alone does not guarantee strong social reporting.
Governance matters, especially Sharia governance. The presence and strength of the
Sharia Supervisory Board, the size of the board of commissioners, and overall
Sharia governance quality are linked to higher ISR disclosure. Banks with
stronger governance structures tend to be more transparent about social and
ethical practices.
Lack of standardization limits progress. Differences in measurement
methods and disclosure indicators across studies reflect the absence of an
official ISR standard in Indonesia. This fragmentation contributes to inconsistent
reporting outcomes.
Governance and Ethical
Accountability
One of the most important insights from the article
is the role of governance in shaping disclosure behavior. Islamic banks with
active Sharia Supervisory Boards are more likely to treat ISR as a core
responsibility rather than a symbolic add-on.
Risty Nandaditya and colleagues emphasize that ISR
is closely tied to ethical accountability. In their analysis, social reporting
reflects not only compliance with external expectations but also internal
commitment to Islamic values. Strong governance structures help translate these
values into concrete disclosure practices.
The authors argue that without effective oversight,
ISR risks becoming a formality rather than a meaningful expression of social
responsibility.
Implications for Industry and
Policy
The findings carry practical implications for
regulators, bank management, and the wider Islamic finance ecosystem.
For regulators, the article highlights the need for
clear and mandatory ISR guidelines. Standardization would improve
comparability, enhance transparency, and reduce reporting gaps between large
and small banks.
For Islamic banks, the review shows that ISR can
strengthen reputation and stakeholder trust. Transparent social reporting supports
long-term legitimacy and helps banks align financial growth with ethical
commitments.
For society and customers, better ISR disclosure
provides clearer information about how Islamic banks contribute to social
welfare, environmental protection, and community development.
As the authors note, “Islamic Social Reporting
should not be viewed merely as a reporting requirement, but as an ethical
responsibility that reflects the true identity of Islamic banking,” an insight
attributed to Risty Nandaditya of Universitas Tanjungpura
Author Profiles
Risty
Nandaditya ,Muhsin, Muhammad Fahmi, Nina Febriana Dosinta, dan Syarif Muhammad
Helmi.
Researchers from Universitas Tanjungpura
Source
Journal: International Journal of Finance and Business Management (IJFBM)
Year: 2026
Official URL: As published by IJFBM
0 Komentar