The Role of the Participatory Depositor in the Governance of Islamic Banks

Abstract

The aim of this paper is to verify whether participatory depositors, a special category of stakeholder that entrusts its savings to the Islamic Bank on the basis of the Profit and Loss Sharing principle, could be better protected by providing for them to be represented in the governance bodies of the Bank.The analysis that was carried out and consideration of potential risks this category of saver could be exposed to shows the need to ensure greater protection to participatory depositors compared to other stakeholders. Three working hypotheses on the protection method to be applied are formulated.The study was carried out on the basis of a comparative analysis of four case studies from Malaysia, Morocco, Germany and Italy respectively.The performed analysis has led to the conclusion that the representation of participatory depositors should be provided in specific corporate governance committees.