Quality Institutions and Human Resource on the Performance of the Islamic Banking Industry: Case of Selected OIC Members
Imron Mawardi(a*), Muhammad Ubaidillah Al Mustofa(b), Tika Widiastuti(c), Mohammad Ghozali(d)

(a,c)Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga
(b)Department of Development Studies, Faculty of Creative Design and Digital Business, Institut Teknologi Sepuluh Nopember
(d)Faculty of Shariah, University of Darussalam Gontor

Abstract

Using panel data from 22 OIC member countries, this study examines the role of institutional quality and human resources on the Islamic banking industry^s performance. The findings indicate that regulatory quality and government effectiveness as proxies for institutional quality have different effects, with regulatory quality having a robust and consistent negative effect on asset growth and total financing. Meanwhile, government effectiveness has a positive impact. This demonstrates that government quality is required to support the development of Islamic banks, but it should be noted that overly strict and rigid regulations will stifle business development. Furthermore, quality human resources improve Islamic bank performance, demonstrating the importance of quality human resources in supporting good governance.

Keywords: Institutional Quality, Quality of Human Resources, Islamic Bank Performance, Good Governance

Topic: Islamic finance and banking