Shari'ah supervision, corporate governance and performance: Conventional vs. Islamic banks

Sabur, Mollah & Zaman, Mahbub (2015) Shari'ah supervision, corporate governance and performance: Conventional vs. Islamic banks. Journal of Banking and Finance, 58, pp. 418-435.

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Abstract

The performance and accountability of boards of directors and effectiveness of governance mechanisms continue to be a matter of concern. Focusing on differences between conventional banks and Islamic banks, we examine the effect of (i) Shari-ah supervision boards, (ii) board structure and (iii) CEO-power on performance during the period 2005-2011. We find Shari'ah supervision boards positively impact on Islamic banks' performance when they perform a supervisory role, but the impact is negligible when they have only an advisory role. The effect of board structure (Board size and board independence) and CEO power (CEO-chair duality and internally recruited CEO) on the performance of Islamic banks is overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards but also emphasize the need for enforcement and regulatory mechanism for them to be more effective.

Impact and interest:

1 citations in Scopus
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ID Code: 93380
Item Type: Journal Article
Refereed: Yes
Keywords: Shari'ah supervision, Corporate governance, Islamic banks, Board of directors, Ethical banking
DOI: 10.1016/j.jbankfin.2015.04.030
ISSN: 0378-4266
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BANKING FINANCE AND INVESTMENT (150200)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Copyright Owner: Copyright 2015 Elsevier B.V.
Deposited On: 06 Mar 2016 23:13
Last Modified: 08 Mar 2016 02:54

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