| Summary: | Islamic bank is an example of organization with �ethical identitiy�.
Ethical identity is people expectation about whether a company did what they said
they will do in marketing campaign. When a bank declared itself an Islamic bank,
people expect the bank to fully operate within Islamic laws. Islamic laws in
economic is not only about doing the permitted business, but also about social and
justice concern in business activity. Thus, Islamic banks have social responsibility
to disclose information about how far they have tried to fulfil those expectations.
Social disclosure is the most obvious way to fulfill that responsibility. However,
previous researches indicated that Islamic bank�s social disclosure is generally
still below the expected level.
This research aimed to explain the gap of previous researches by trying
to find the variables influencing an Islamic bank�s social disclosure level. This
research also expanded the finding by analyzing the relationship between social
disclosure level and Islamic banks� financial performance. This research used
regression analysis to find the variables influencing social disclosure and to test
whether social disclosure mediates the relationship between the variables and
Islamic banks�financial performance or not. This research used panel data of
social disclosure and financial performance from 34 Islamic banks in 2010-2012.
This research found out that the variables which influence Islamic bank�s
social disclosure significantly are political right and civil freedom, Muslim
population, Islamic governance quality of the bank, country�s economic
condition, and size of the Islamic bank. This research also found out that social
disclosure negatively influence Islamic banks� financial performance in the next
period, so the influence between social disclosure and Islamic banks� financial
performance only happened after certain time has passed. Social disclosure also
mediates the relationship between Muslim population and Islamic banks� financial
performance.
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