ANALYSIS OF THE RELATIONSHIP BETWEEN THE ISLAMIC SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE IN SHARIA BANKS IN INDONESIA AND MALAYSIA 2018-2022

This research discusses the influence of the Islamic Social Responsibility on financial performance in Islamic banks in Indonesia and Malaysia. This research covers five years of observation, from 2018 to 2022 using panel regression data. The independent variable used in this research is the Islamic Social Responsibility (ISR) and Islamicity Performance Ratio which consists of Profit Sharing Financing Ratio (PSR), Zakat Performance Ratio (ZPR), Equitable Distribution Ratio (EDR), and Director-employee Welfare Ratio (DER). Then the dependent variable used is the financial performance of Islamic banks which is measured using ROA. And the control variable is Capital Adequacy Ratio (CAR), Financing to Deposit Ratio (FDR), bank size, and Non Performing Financing (NPF). Data collected from annual reports and sustainability reports were analyzed using the Fixed Effect Model to see how ISR affect profitability in sharia banks. The research results show that ZPR and EDR have a significant effect on ROA. Meanwhile, ISR, PSR, DER, CAR, FDR, size, and NPF do not have a significant effect on ROA as a measurement of the financial performance of Islamic banks.