The Influences of the Good Corporate Governance on Financial Performance Empirical Study : Islamic Banks in Indonesia

This research aims to explain the quality of Good Corporate Governance implementation in Islamic Banks in Indonesia, and examines its effect toward return and financings risk. Data used in this research is secondary data. The Islamic Banks’s Good Corporate Governance implementation quality is measured by 70 indicators divided into 11 factors adapted from appendix 4 of SE. BI. No.12/13/BPbS on april 30 th 2010, return is measured by return on assets ratio (ROA), and the Non-performing financings (NPFs) ratio is used as financings risk proxy . The effect of independent variable toward dependent variable is analysed using simple linear regression model, while t test is used to examine the effect signification. The results show that the Islamic Bank’s Good Corporate Governance implementation quality is good proven by mean of composite value 1.58, Whereas the t test result on regression model shows that the quality of Good Corporate Governance implementation doesn’t influence the return (0.083 < 0.05), and has no influence toward reduce financings risk of Islamic Banks in Indonesia (0.171 < 0.05). Keyword: Good Corporate Governance, Return, Financings Risk, Islamic Bank