CSR Disclosure and Financial Performance in Indonesia Islamic Banks: The Moderating Role of Board Governance Characteristics

Abstract

Aims: This study aims to analyze the effect of Corporate Social Responsibility (CSR) on the financial performance of Islamic commercial banks in Indonesia and to examine whether Good Corporate Governance (GCG), as measured by board size and board gender diversity, moderates this relationship. Study Design: Quantitative approach using panel data regression. Place and Duration of Study: The study focuses on 13 Islamic commercial banks in Indonesia during the period of 2018–2023, with a total of 66 bank year observations. Methodology: CSR was measured using a disclosure index based on sustainability reports. GCG was assessed through board size and gender diversity ratio. Financial performance was proxied using Return on Assets (ROA). Data were analyzed using Random Effect Model (REM) regression with robust standard errors. Moderation analysis was performed using interaction terms between CSR and the two GCG indicators. Results: The study finds that CSR disclosure has a positive effect on ROA. The direct effects of board size and gender diversity are insignificant. Moderating effects are weak: gender diversity shows marginal interaction, while board size has no meaningful moderating influence. Conclusion: The study highlights the importance of CSR disclosure in enhancing the financial performance of Islamic banks. Although GCG indicators do not show strong moderation, the findings suggest that meaningful female board participation and robust CSR reporting may contribute to performance alignment with Sharia principles. This study contributes by integrating CSR–GCG interaction within the context of Sharia-based banking and offers practical insights for policymakers and financial institutions.