The Influence of Shariah Supervisory Board on the Financial Stability of Islamic Banks

Abstract

The chapter studies the impact of the shariah board's characteristics on the financial stability of Islamic banks. Regression analysis is used to investigate the effect of the shariah board's characteristics on the financial stability of Islamic banks, employing a panel data set of 60 Islamic banking from 2015 to 2018. The findings show that a skilled shariah scholar and a female member have a negative effect on the financial stability of Islamic banks. However, the interlocked shariah scholars and foreigners positively influence the financial stability of banks. Plus, the results indicate that the religious leader (Mufti) and shariah board's size have no significant influence on the financial stability of Islamic banking. This study enhances the literature analysis on corporate governance frameworks and their effect on Islamic banking's financial stability.