Corporate Governance And Stakeholders' Financial Interests In Institutions Offering Islamic Financial Services

Grais, Wafik; Pellegrini, Matteo

doi:10.1596/1813-9450-4053

Cited by 32 publications

(33 citation statements)

References 7 publications

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“…Grais and Pellegrini, 2006). Sharia scholars that get the reputation of being too lenient in giving halal ratings will suffer reputation loss and thus refrain from such activities.…”

Section: Disclose Conflict Of Interestmentioning

confidence: 99%

Halal Certification for Financial Products: A Transaction Cost Perspective

2011

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“…Grais and Pellegrini, 2006). Sharia scholars that get the reputation of being too lenient in giving halal ratings will suffer reputation loss and thus refrain from such activities.…”

Section: Disclose Conflict Of Interestmentioning

confidence: 99%

Halal Certification for Financial Products: A Transaction Cost Perspective

2011

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“…Consequently this complex multiple principal -agent problem arises where an IAH as a principal, entrusts their investment to an agent, the Islamic bank's management who are appointed by another principal, the shareholder Pellegrini, 2006a andFarag, 2016). Safieddine (2009) points out that the agency relationships in Islamic banks are more complex than those faced by conventional banks.…”

Section: Introductionmentioning

confidence: 99%

Corporate governance in Islamic banks: New insights for dual board structure and agency relationships

Farag

Mallin

Ow-Yong

2018

Journal of International Financial Markets, Institutions and Mo

171

142

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We investigate the influence of the dual board structure on the financial performance of Islamic banks. The paper also investigates the unique agency relationships using a sample of 90 Islamic banks across 13 countries over the period [2006][2007][2008][2009][2010][2011][2012][2013][2014]. We find that the larger the Shari'ah Supervisory Board (SSB) the better the financial performance and this result reinforces the fundamental role of the SSB to certify permissible financial instruments and products. We also find evidence of the scope of operation hypothesis with respect to both the board of directors and the SSB as Islamic banks are characterised by a higher degree of complex operations. Interestingly, we find that a larger SSB size may result in lower agency costs and that the greater the size of the unrestricted contracts, the higher the agency costs. This implies that unrestricted profit-sharing contracts are one of the main sources of the unique agency relationships in Islamic banks. The paper has a number of policy implications for regulators including the design of governance mechanisms in Islamic banks and the dynamics of unrestricted contracts. Corporate Governance in Islamic Banks: New Insights for Dual Board Structure and Agency Relationships AbstractWe investigate the influence of the dual board structure on the financial performance of Islamic banks. The paper also investigates the unique agency relationships using a sample of 90 Islamic banks across 13 countries over the period 2006-2014. We find that the larger the Shari'ah Supervisory Board (SSB) the better the financial performance and this result reinforces the fundamental role of the SSB to certify permissible financial instruments and products. We also find evidence of the scope of operation hypothesis with respect to both the board of directors and the SSB as Islamic banks are characterised by a higher degree of complex operations. Interestingly, we find that a larger SSB size may result in lower agency costs and that the greater the size of the unrestricted contracts, the higher the agency costs. This implies that unrestricted profit-sharing contracts are one of the main sources of the unique agency relationships in Islamic banks. The paper has a number of policy implications for regulators including the design of governance mechanisms in Islamic banks and the dynamics of unrestricted contracts.

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“…However, even fewer studies have investigated the governance of Islamic banks (e.g. Grais and Pellegrini, 2006a;Nathan and Ribiere, 2007;Ghayad, 2008;Safieddine, 2009;Abu-Tapanjeh, 2009). Saffieddine (2009) argues that IFIs deserve special analysis as their agency structure is more complex than that of conventional firms.…”

Section: Introductionmentioning

confidence: 99%

Corporate Governance and Corporate Social Responsibility in Financial Institutions: Evidence from Islamic Banks

Farag

2014

Corporate Governance and Corporate Social Responsibility

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Islamic banks play a significant role in the financial sector in a number of emerging markets especially countries with a large Muslim population. The objectives of Islamic banks are fundamentally different from those of conventional banks. While conventional banks seek to maximize their shareholders wealth, Islamic banks primarily strive to achieve a balance between providing sufficient Shari'ah compliant returns and their social responsibilities to various stakeholders. Moreover, Islamic banks are characterized by multiple agency relationships. I analyze the corporate governance characteristics of a sample of Islamic banks in six emerging countries and their corporate social responsibility (CSR) as these two aspects are increasingly related. I identify areas of interest through mini case studies and examples. Finally, I conclude by considering the likely future development of corporate governance and CSR in Islamic banks in emerging markets.

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Corporate Governance And Stakeholders' Financial Interests In Institutions Offering Islamic Financial Services

Cited by 32 publications

References 7 publications

Halal Certification for Financial Products: A Transaction Cost Perspective

Halal Certification for Financial Products: A Transaction Cost Perspective

Corporate governance in Islamic banks: New insights for dual board structure and agency relationships

Corporate Governance and Corporate Social Responsibility in Financial Institutions: Evidence from Islamic Banks

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