Model of Sharia Governance and Escalation of Performance of Sharia Cooperatives

Abstract

Purpose: This study aims to analyze a sharia governance model and its impact on the efficiency, information asymmetry, risk, and performance of sharia cooperatives. Theoretical framework: The purpose of the sharia cooperative is to improve the welfare of its members and the community's interest and participate in building the economy of Indonesia based on sharia principles (Sudjana and Rizkison, 2020). Design/methodology/approach: The type of research used is explanatory research to test the hypothesis. This study uses data analysis techniques using the smartPLS program. The research uses purposive sampling with sharia cooperatives located in 4 districts in Indonesia with a total sample of 165 cooperatives. Findings: The study's results found that the efficiency variable has a significant positive effect on the performance of the sharia cooperative. Information asymmetry has a nonsignificant negative impact on efficiency and the performance of sharia cooperatives. Information asymmetry has a significant positive effect on the risk of financing. The risk of financing has a nonsignificant negative effect on the performance of the sharia cooperative. Sharia governance has a significant positive impact on efficiency, information asymmetry, and the performance of sharia cooperatives but has a nonsignificant positive effect on the risk of financing. Research, Practical & Social implications: Further research is necessary to expand the research location, multiply the study's sample and variables and involve the cooperative members as respondents. Originality/value: The management of the sharia cooperative needs to apply sharia governance to improve efficiency and follow sharia provisions to maximize the performance of sharia cooperatives.