Characteristics of Shar¯ı‘ah Supervisory Board, Corporate Governance Mechanisms and Efficiency of Islamic Banks: Evidence from Listed Banks in Asia

Hussain, Sajjad; Shahzad, Khurram; Khan, Khurram; Ahmad, Ifzal

doi:10.26501/jibm/2018.0801-008

Cited by 6 publications

(13 citation statements)

References 56 publications

(74 reference statements)

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“…Sharia governance and IC are related in that they both play a role in achieving IB performance (Saeed and Saeed, 2018). The SSB is tasked with ensuring sharia compliance, while the board of directors is responsible for allocating IC resources efficiently to improve IB performance (Nawaz, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

Exploring the relationship between intellectual capital and maqasid sharia-based performance: the moderating role of sharia governance

Prasojo

Yadiati

Fitrijanti

et al. 2022

JIMA

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Purpose The purpose of this study is to examine the relationship between intellectual capital, sharia governance and Islamic bank performance based on the maqasid sharia index, as well as the moderating effect of sharia governance on the relationship between intellectual capital and maqasid sharia index. Design/methodology/approach Dynamic panel regression is used with the two-step generalised method of moments with data from the Bankscope database for 2014–2018. Findings The results show that higher intellectual capital efficiency improves Islamic bank performance based on maqasid sharia. Larger board sizes are also found to improve Islamic bank performance. By contrast, higher sharia supervisory board quality and larger independent boards can reduce Islamic bank performance. In the moderating relationship, sharia governance is proven to moderate the relationship between intellectual capital and Islamic bank performance. Research limitations/implications This study used a sample that is restricted to Islamic bank and only used value-added intellectual coefficient to measure intellectual capital. Thirdly, the quality of the sharia supervisory board only involves the presence, size, expertise and doctoral qualification of the sharia supervisory board. Originality/value This research: analyses the relationship between intellectual capital, sharia governance and Islamic bank performance in one research framework; uses maqasid sharia index-based Islamic bank performance benchmarks; and examines the moderating effect of sharia governance on the relationship between intellectual capital and maqasid sharia index.

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Section: Literature Reviewmentioning

confidence: 99%

Exploring the relationship between intellectual capital and maqasid sharia-based performance: the moderating role of sharia governance

Prasojo

Yadiati

Fitrijanti

et al. 2022

JIMA

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“…In prior researches, bank governance theories are commonly discussed consisting of agency theory, stewardship theory, resource dependency theory, and stakeholder theory. This manuscript focuses solely on stewardship theory and resource dependency theory applicable to Islamic banking studies (Bilal Saeed & Kashif Saeed, 2018;Nomran, Haron & Hassan, 2018;Nomran, Haron, & Hassan, 2017). The stewardship philosophy sees managers as good stewards of the business organization who work diligently to achieve a high level of corporate profit and returns for shareholders (Donaldson & Davis, 1991;Abdullah & Valentine, 2009;Cornforth & Chambers, 2010).…”

Section: Bank Governance Theoriesmentioning

confidence: 99%

Shariah Governance Characteristics and Risk-taking of Local and Foreign Islamic Banks in Malaysia: A Conceptual Model

Rasli¹,

Kassim²

2020

JAFEE

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Purpose: In Malaysia, since the global financial crisis in 2007 and 2008, the low level of stability, excessive risk-taking and weak governance structure in the dual banking system has become essential for deliberation. The purpose of this research is to develop a conceptual model on the effect of Shariah governance characteristics on risk-taking between local and foreign of Islamic banks in Malaysia. Design/Methodology/Approach: Based on prior review of indicators and findings, this research proposes a conceptual model of effective Shariah governance characteristics and its effect on risk-taking of Islamic banks. A self-develop of Shariah board index (SB-Index) based on SB size, education background, membership with IFSB and attendance in meeting. Insolvency risk, credit risk and liquidity risk are the proxy used for risk-taking measurement. The theory of stewardship and resource dependency theory are used as examples of the theories of corporate governance to support the conceptual framework suggested. Findings: The Islamic banks in Malaysia are assumed to have effective Shariah governance and there will be low impact on risk-taking. Implications/Originality/Value: The regulators of Islamic banks must prepare for the need to improve the current standards for corporate governance in Malaysia.

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“…financial performance (Alsartawi, 2019;Baklouti, 2020;Nomran et al, 2018); risk-taking (AlAbbad, et al, 2019;Alman, 2012); equity financing (Meslier et al, 2020); Shariah governance disclosure (Noordin and Kassim, 2019); Shariah compliance (Dahlifah and Sunarsih, 2019); Shariah supervisory boards of Islamic banks Islamic social reporting (ISR) (Meutia et al, 2019;Nugraheni, 2018); bank efficiency (Saeed and Saeed, 2018); and financial soundness (Khalil and Taktak, 2020).…”

Section: Introductionmentioning

confidence: 99%

“…They have investigated board attributes of IFIs including board size (Najwa et al , 2019; Shittu et al , 2016), board composition (Bukair and Abdul Rahman, 2015), gender diversity (Ahmed, 2020), board duality (Hakimi, 2018) and board independence (Muhamad et al , 2019). Likewise, studies on SSBs have focused on the relationship between SSBs and various dimensions of IFIs, including but not limited to: financial performance (Alsartawi, 2019; Baklouti, 2020; Nomran et al , 2018); risk-taking (AlAbbad, et al , 2019; Alman, 2012); equity financing (Meslier et al , 2020); Shariah governance disclosure (Noordin and Kassim, 2019); Shariah compliance (Dahlifah and Sunarsih, 2019); Islamic social reporting (ISR) (Meutia et al , 2019; Nugraheni, 2018); bank efficiency (Saeed and Saeed, 2018); and financial soundness (Khalil and Taktak, 2020). …”

Section: Introductionmentioning

confidence: 99%

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

Kachkar

Yılmaz

2022

IJOES

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Purpose This study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing composition of SSBs and the regulatory frameworks and standards of selected Organisation of Islamic Cooperation countries. Diversity characteristics include education, nationality, gender and age. Design/methodology/approach A list of all full-fledged Islamic commercial banks (FFICBs) globally has been carefully prepared and confirmed. Conventional banks with Islamic windows, non-commercial banks, takaful companies and other Islamic financial institutions are excluded. The available profiles of 428 SSB members have been scrutinised and analysed. These board members occupy 522 SSB positions in 238 FFICBs operating in 52 countries around the globe. From the regulatory perspective, 12 national and international Shariah governance frameworks and standards have been examined. Findings Findings of this paper indicate various levels of diversity in SSBs of the reviewed IBs. The level of diversity in educational background and in the nationality of SSBs can be described as generally acceptable. However, a lack of diversity in gender and age among SSB members is evidently observed in IBs. While the lack of age diversity in SSBs may be relatively justified as a common trend in the composition of corporate boards, SSBs of IBs are seriously lagging behind in gender diversity. On the regulatory level, this study concluded that provisions on diversity as a requirement in SSBs are almost non-existent in the existing regulatory frameworks and standards. Research limitations/implications The major limitation of this study is the lack of available information on the SSB members. Practical implications This paper provides insights for IBs and policymakers concerned with the corporate governance of IBs and all Islamic financial institutions. First, it offers an excellent bird’s-eye view of the status of diversity in SSBs of IBs. Second, it motivates policymakers and standard-setting bodies to ensure, through the relevant regulatory frameworks, adequate levels of diversity in the composition of SSBs. Diversity in SSBs of IBs and Islamic financial institutions should be given special emphasis, not only in boards and top management positions but also in the workplace. This is of profound significance to the reputation of Islamic finance industry which has been recently under mounting pressure to translate the rhetoric about the Islamic finance industry being ethical, fair, just, equitable and inclusive into genuine implementations. Originality/value To the best of the authors’ knowledge, this study is the first of its kind to examine the diversity of SSB members from the regulatory as well as from the implementation perspective.

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Characteristics of Shar¯ı‘ah Supervisory Board, Corporate Governance Mechanisms and Efficiency of Islamic Banks: Evidence from Listed Banks in Asia

Abstract: This study investigates the impact of characteristics and role of KAUJIE Classification: L22, L24, L25, L33, V12 JEL Classification: G21, G24, G3

Cited by 6 publications

References 56 publications

Exploring the relationship between intellectual capital and maqasid sharia-based performance: the moderating role of sharia governance

Exploring the relationship between intellectual capital and maqasid sharia-based performance: the moderating role of sharia governance

Shariah Governance Characteristics and Risk-taking of Local and Foreign Islamic Banks in Malaysia: A Conceptual Model

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

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