A Sharia Governance Index Analysis to Evaluate Sustainability Disclosure Quality In Indonesian and Malaysian Islamic Banks

Abstrak

Introduction/Main Objectives: This study examines the role of sharia governance in
improving sustainability disclosure quality in Islamic banks in Indonesia and Malaysia.
The topic is important because Islamic banks are expected not only to comply with
financial regulations, but also to demonstrate accountability, transparency, social
responsibility, and consistency with maqasid al-shariah values. Previous studies have
discussed sustainability disclosure and sharia governance separately, while limited
empirical evidence explains how sharia governance quality is related to sustainability
disclosure quality in a comparative Islamic banking context. Research Methods: This
study applies a quantitative approach using archival research and deductive content
analysis. The sample consists of 20 Islamic banks from Indonesia and Malaysia during
2021–2024, resulting in 80 bank-year observations. Sharia Governance Index (SGI) is
measured using 18 indicators, while Sustainability Disclosure Quality Index (SDQI) is
measured using 27 indicators based on annual reports, sustainability reports, integrated
reports, financial statements, and sharia committee reports. The data are analyzed using
descriptive statistics, country comparison, correlation analysis, multicollinearity test, and
panel regression. Finding/Results: The results show that the mean SGI is 88.94%, while
the mean SDQI is 83.51%. The fixed effects model indicates that SGI has a positive and
significant effect on SDQI. Bank size and year trend also show positive effects, while
country differences are not statistically dominant. Conclusion: The findings confirm that
sharia governance is an important accountability mechanism for improving sustainability
disclosure quality. Strengthening sharia governance ca