Sharia Compliance, Islamic Corporate Governance, and Fraud: A study of Sharia Banks in Indonesia

Abstract

This study aims to examine the effect of Islamic Corporate Governance and Sharia Compliance on indications of fraud occurring in Indonesia’s Islamic Banks from 2016 to 2020. The independent variables are Islamic Corporate Governance and Sharia Compliance with the Proxy of Islamic Income Ratio and Profit Sharing Ratio. The dependent variable is fraud in Islamic Commercial Banks. The population in this study were all Islamic Banks registered in the Financial Services Authority in the period 2016 to 2020. The samples were selected using the purposive sampling method. In this study, there were 11 Islamic Banks with a 5 years research period so that the total sample used in this study amounted to 55. The analytical method used in this study was logistic regression which was processed using SPSS version 25. The results of this study indicate that the Islamic Corporate Governance variable has a positive influence on indications of fraud occurring in Islamic Commercial Banks, Sharia Compliance with the Proxy Profit Sharing Ratio has a negative influence on indications of fraud occurrence in Islamic Commercial Banks while Sharia Compliance with the proxy of Islamic Income Ratio does not affect the indications of the occurrence of frauds in Islamic Commercial Banks.