Implementation of Sharia Governance and its Implications on BPRS Reputation

This study empirically investigates the influence of sharia governance on customer trust and bank reputation among Sharia People's Financing Banks (BPRS) in West Sumatra, Indonesia. Additionally, it analyzes the mediating role of customer trust on BPRS reputation. The research addresses a gap in the existing literature concerning the specific interactions of these variables within the BPRS context. The Partial Least Squares-Structural Equation Modeling (PLS-SEM) methodology was employed for data analysis, utilizing secondary data from audited annual financial reports of BPRS for the period 2019-2022, obtained from the Financial Services Authority (OJK) website. The research sample was selected using a purposive sampling technique, encompassing BPRS across several regencies/cities in West Sumatra. Key findings indicate that sharia governance, measured by the number of directors and commissioners, has a significant positive influence on customer trust (t-statistic = 4.970, p-value = 0.000). This result affirms that robust sharia governance implementation is crucial for fostering customer trust. However, the findings reveal that sharia governance does not directly and significantly impact BPRS reputation (t-statistic = 0.868, p-value = 0.386), suggesting an indirect influence pathway. Conversely, customer trust demonstrates a highly significant and positive influence on BPRS reputation (t-statistic = 9.330, p-value = 0.000). The implications of this study suggest that for BPRS in West Sumatra, prioritizing strong sharia governance will fundamentally enhance customer trust. This trust, in turn, serves as a primary driver for improving and maintaining the bank's reputation, which is essential for the sustainable growth and stability of sharia financial institutions in the region