Title: Social responsibility reporting of Islamic banks: evidence from Indonesia

Authors: Faizah Darus; Hasan Fauzi; Yadi Purwanto; Haslinda Yusoff; Azlan Amran; Mustaffa Mohamed Zain; Dayang Milianna Abang Naim; Mehran Nejati

Addresses: Accounting Research Institute (ARI) and Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia ' Faculty of Economics and Business, Sebelas Maret University, Indonesia; School of Accountancy, Universiti Utara Malaysia, Sintok, Kedah, Malaysia ' Faculty of Psychology, Universitas Muhammadiyah Surakarta, Indonesia ' Accounting Research Institute (ARI) and Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia ' Graduate School of Business, Universiti Sains Malaysia, Malaysia ' Accounting Research Institute (ARI) and Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia ' Accounting Research Institute (ARI) and Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia ' Graduate School of Business, Universiti Sains Malaysia, Malaysia

Abstract: There is a growing global interest in social responsibility and sustainability across all sectors. Other than economic performance, stakeholders are now also concerned about the social and environmental impacts of corporations. Additionally, stakeholders are obtaining a higher salience level and expect organisations to operate sustainably. The banking sector has not been an exception, as banks can have significant impact on their customers, employees, and society in various ways. Given the intertwined links of Islam and ethical principles, it is expected that Islamic banks will show a high level of commitment towards social responsibility (SR) and ethical practices. The current study investigates this issue by examining the annual reports of three fully-fledged Islamic commercial banks in Indonesia over the period of 2007 to 2011. It was found that only two of the investigated banks had continuous improvement in their SR disclosure. Additionally, it was revealed that the highest disclosures have been for 'corporate vision' and 'board of directors and top management', while the lowest disclosures were evident for 'environment' and 'product, services and fair dealing with supply chain'.

Keywords: social reporting; corporate social responsibility; CSR; Islamic banks; annual reports; Indonesia; Islamic finance; ethics; ethical practices; commercial banks; banking industry; voluntary disclosure.

DOI: 10.1504/IJBGE.2014.066275

International Journal of Business Governance and Ethics, 2014 Vol.9 No.4, pp.356 - 380

Received: 27 Jul 2013
Accepted: 01 Aug 2014
Published online: 31 Mar 2015 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article