Improving Profit Quality Through Islamic Bank Performance and Islamic Corporate Governance: Evidence IBS in Indonesia

This paper aims to explore the extent of the role of Islamic Corporate Governance (ICG) and Islamic Bank Performance (IBP) in improving Earnings Quality (EQ) by using various dimensions for each construct variable of the study with a case study on Islamic banking in Indonesia. The object of this research is Islamic banking in 2018-2022, registered with the Financial Services Authority. Based on purposive sampling, 12 samples of banking companies were obtained, and over five years, 60 data were obtained. The existence of variables that use multiple measurements, the appropriate data processing used is Partial Least Square. The inner model test shows that ICG and IBP can increase EQ. However, ICG is unable to increase IBP in Indonesia. Likewise, IBP is unable to mediate the relationship between ICG and EQ. Previous research measuring each construct/variable, such as the ICG, IBP, and EQ variables, only used a single dimension. Therefore, this research is the first to use multiple measurements for each variable studied with the path analysis technique. The purpose of this research for policymakers is to provide empirical evidence of the importance of the role of the Sharia board and the performance of Sharia banking in improving a company's earnings quality. This research's limitation is that it uses non-Sharia indicators for EQ variable, while the IBP and ICG variables use Sharia indicators. However, this research's implication for future research is the importance of using Sharia indicators for the EQ variable.