Islamic Banking Sustainability In Indonesia

Corporate governance exists to increase and maintain shareholder value. On this basis, corporate governance is argued to be vital to any company's long-term viability. To determine how transparency and accountability affected the Islamic banking sector's long-term viability. The study was guided by three theories: agency theory, stewardship theory, and stakeholder theory. This study is quantitative. It is used in quantitative research to generate numerical data or data that can be transformed into statistics. Transparency, accountability, justice, and responsibility are all important factors in the study's findings. Transparency and accountability appear to have a significant impact on the banking industry's long-term viability. To achieve sustainability, Islamic banks in Indonesia should strictly enforce transparency in all operations and worker activities.

The drive to improve efficiency is not unique to the banking business. Most firms are regularly looking for methods to operate more effectively, as more efficient enterprises are often more profitable and better positioned to create larger returns for their owners. Businesses are often able to run more effectively thanks to technology improvements. Banking has certainly experienced significant technological developments over recent decades, such as the advent of computers, ATM creation, electronic payment evolution and expansion in internet banking. ATMs are a great example of this. As a result of these developments in technology, banks are able to grow much larger organizations with fewer employees, branches, and support offices while still providing superior customer service. For example, during the past several years, a dramatic shift has been noticed in how clients interact with their banks (Sholikah & Miranti, 2020).
Corporate governance, or Good Corporate Governance (GCG), has been around for a long time. GCG is vital in the establishment of a company to increase the income and welfare of owners, shareholders, and employees. Stakeholders will be empowered to make decisions, allowing management to focus on generating Islamic Banking … 61 profits for the company's owners and shareholders. The principles and metrics of good corporate governance are the same in all sectors; the application varies.
Because banks deal with people's trust and the Indonesian economy, effective corporate governance has been difficult to implement (Ayunitha et al., 2020;Lozano et al., 2016;Mukhtaruddin et al., 2019). As a business that contributes to a country's economy, banks should practice Good Corporate Governance to maintain honesty, dedication, and commitment.
Bank Indonesia has devised a series of regulatory measures in an effort to reduce the prevalence of fraud in the banking industry. Implementing a Good Corporate Governance (GCG) system is one method for combating fraud. As a result of existing fraud problems, it is critical for a financial institution to adopt the principles of Good Corporate Governance to the fullest extent possible. This is because the bank faces both internal and external risks and problems. A healthy and transparent business atmosphere can only be created if banks adhere to GCG principles, which can help them survive in the face of ever-increasing competition and ensure that they are adhering to good business ethics. Fraud will be less likely to occur as a result of the implementation of Good Corporate Governance.
In order for the banking industry to grow and prosper, it is imperative that the public and the international community have faith in it. GCG principles can be used as a foundation for sensible and professional business practices when applied to internal banking reforms. As a new corporate management model for today's businesses, Good Corporate Governance (GCI) is seen as a way for banks to effectively manage the current and future difficulties of fierce interbank competition for customers' trust and business growth. In actuality, not all of the Good Corporate Governance concepts that are aspired to and anticipated to be implemented in a corporation are really implemented. There has been a widespread perception that, with the installation of GCG, a company's corporate governance has been flawless.
However, things aren't as straightforward as they appear. GCG's realization Helma Malini Vol. 6, No.1, Tahun 2022 62 necessitates additional effort and assistance from a variety of sources, both within and beyond the organization.
There are five fundamental concepts that should guide the implementation of excellent corporate governance in the banking industry: Openness in expressing relevant and material information, as well as transparency in the decision-making process, is first and foremost. Second, accountability, which includes a clear definition of roles and responsibilities, as well as the installation of an accountability bank. As a third consideration, the bank's management must demonstrate that it adheres to both current legislation and the best practices of sound bank management. Finally, the bank's independence ensures that the bank's management is professional and independent of any external influence or pressure. It's also important to ensure that stakeholders' rights are being met in accordance with the existing agreement and legislation. Banks must follow a variety of regulations and minimal standards and guidelines in order to implement the 5 (five) essential principles described above.
Good corporate governance establishes a professional framework for owners, managers, shareholders, and stakeholders to interact. Each role has its own set of tasks that must be completed with accountability and responsibility while working for the same aim of high profit (Krenn, 2014). Banks are subject to a variety of risks and must comply with government regulations. Due to their size, some banks can fail, affecting millions of people. Governments can better regulate banks by recognizing the risks they face by making responsible decisions (Malini et al., n.d.) A more long-term and resilient global financial system, requiring accountability and transparency. We consider the banking sector more transparent if it has a more reliable information system about risky loan returns. Increasing transparency does not always reduce exogenous return uncertainty. Instead, we're talking about the reliability of a publicly observable signal correlated with transparency (Ashamu & Abiola, 2012). Good corporate governance promotes investment, financial stability, and long-term economic success by encouraging trust, transparency, and accountability. Corporate governance is a process and framework for directing and Islamic Banking … 63 managing a company's affairs to achieve long-term shareholder goals. Reducing and compensating for financial products' carbon footprints. In order to identify their major sources of carbon pollution, banks should track, offset, and certify their emissions while creating banking products.
Increasingly, Islamic banking is based on religious principles supported by the implementation of a risk-sharing model that requires several prerequisites, such as openness and accountability, sound economic institutions and well-functioning financial markets. The Islamic banking industry has grown to be a significant part of the country's financial infrastructure and a driver of economic progress. Two nations in Asia, Indonesia and Malaysia, reflect the rise of Islamic banking in the region.

Asian Shariah Industry hubs, notably in ASEAN, are established in Malaysia and
Indonesia as a point of reference for the newest advances in the Shariah industry.
According to the definition provided by the Central Bank of Indonesia, a bank is an entity that operates for the purpose of collecting funds from the general public in the form of savings and distributing those funds back to the general public in the form of loans or other financial services in order to raise the general population's standard of living. In order to cater to the religious needs of Indonesia's predominantly Muslim population, the country's financial system transitioned to an Islamic model sometime during this decade. The Islamic financial system in Indonesia has expanded across a variety of financial sectors, including capital markets, insurance, mortgage, savings and loan institutions, and banks, amongst others. It makes the Islamic system superior than the conventional system that was previously utilized, which makes it intriguing to compare their performances and future prospects in particular.
Establishing an Islamic bank is impossible without also establishing a conventional bank. The ideology and economic roles of the two banking systems are slightly different. Both Islamic and conventional banks are run in the same way at the local level. Implementation theory for deposits that should be viewed as mere custody, for example. Banks are currently employing the theory of irregular deposit   (Malini, 2016(Malini, , 2021b or the disclosure of sustainable information through bank publication reports (Liu et al., 2012), However, few studies have examined the impact of sustainable Islamic banking on bank performance. A fascinating subject to research further is the use of information technology innovation and improving the quality of financial services.
Sustainable banking entails more than just financial gains; it also entails moral responsibilities. Climate change and social justice problems are becoming increasingly popular around the world, and banking clients are looking for banks that offer services that are in line with these new standards. Banks give value-added services to their consumers by allowing customers to become involved in these concerns. Customers have the potential to make a difference in the world because of the increased transparency that sustainable banking provides. People's urge to make decisions that have long-term consequences is only going to grow in the future (Sarker et al., 2019;Zainuldin et al., 2018).
In practice, whether sustainable Islamic banking improves financial or nonfinancial institutions is still debated. For a business to survive in the competitive financial sector, financial success is critical. However, non-financial performance issues like social and environmental issues also boost banking performance. This

Helma Malini
Vol. 6, No.1, Tahun 2022 66 study's goal was to assess how transparency and accountability affect the Islamic banking sector's sustainability in Indonesia. Since adoption was influenced by contextual (bank-specific) factors, bank corporate governance affects the process of going to sustainability. Results of this study may support sustainable banking practices, both as a short-term financial investment and as a long-term policy discretion. In terms of regulation, this research will support the Financial Services Authority's sustainable finance roadmap for financial institutions in Indonesia (OJK).

B. Discussion
There are 160 observations, 32 cross section data, and a 5-year timeframe in     Islamic banking industry adopted sustainability to reduce financial, social, and environmental risks, making it a strategic issue. As a result of this research, regulations on the implementation of pro-environmental policies, such as sustainable finance in banking, are being supported.