Corporate governance in Islamic banks: A comparative study of conservatives, moderates, and liberals

Abstract

This study seeks to fill the gap in the current literature on corporate governance in Islamic banks. A major limitation of these studies, leading to skewed results when analyzing corporate governance and other issues, is their treatment of all the Islamic banks in one category. This study addresses this issue with results showing that corporate governance is not uniform across various categories of Islamic banks. The study analyzes various aspects of corporate governance in Islamic banks by first classifying them into three categories (i.e., Liberals, Moderates, and Conservatives). A comparison of four important variables of corporate governance (i.e., size of SSB, size of audit committee, size of board of directors, and board composition) within these three categories was expected to yield some new findings. The study uses a sample of 80 fully Islamic banks for the years 2009-2014, from the countries of the GCC, Yemen, Egypt, Sudan, Tunisia, Syria, Turkey, Indonesia, Malaysia, Pakistan, Bangladesh, the UK, and South Africa. The study aims to strengthen and enhance our knowledge of some relevant corporate governance mechanisms in Islamic banks. The results of this study are expected to be useful to practitioners of corporate governance in Islamic banks, customers, and financial regulators including central banks and other relevant stakeholders. In addition, it may allow further research to bring necessary reforms to the corporate governance of Islamic banking and thus generally strengthen its practice.

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

“…This role of corporate governance in improving efficiency in Islamic banks is particularly significant. This has to be strengthened while various independent standard-setting organizations have developed standards and procedures to guide and shape the governance procedures of Islamic Financial Institutions (IFIs) (Kumar & Aljifri, 2016).…”

Do Corporate Governance Internal Characteristics Affect the Level of Sustainability Reporting in Saudi Arabian Banks?

“…Corporate governance has been found to play a key role in enhancing sustainability reporting and financial performance in banks (Khandelwal & Aljifri, 2016) However since the level of adoption of corporate governance structures differs depending on the bank, the impact of corporate governance is not the same across different banks.…”

İslami Bankalarda Kurumsal Yönetişim ve Performans: Malezya ve Körfez Işbirliği Konseyi Ülkelerindeki Bankaların Karşılaştırmalı Bir Çalışması

“…As stated above, studies on corporate governance in Islamic banks mostly in recent years, keep a quite small space in the literature. These existing studies focus either on the structure of Shari`a advisory boards in Islamic banks or on the theoretical comparison of corporate governance systems in conventional banks and Islamic banks (see, Khandelwal and Aljifri, 2016;Almutairi and Quttainah, 2017;Ulussever, 2018). In his study, by using corporate governance variables belonging to Islamic and conventional banks from many countries, Ulussever (2018: 34) revealed that Islamic banks have stronger boards and chief executive officers than traditional banks.…”