Dual board governance, ownership structure and performance of islamic banks : a comparative analysis on selected countries /
Islamic banks (IBs) must guarantee that all of their products and operations are Shari'ah compliant, and therefore, IBs have unique agency issues which give rise to different agency conflicts. For that, IBs have unique board governance structure, i.e. Shari'ah supervisory board (SSB) besid...
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| Format: | Thesis |
| Language: | English |
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| Online Access: | Click here to view 1st 24 pages of the thesis. Members can view fulltext at the specified PCs in the library. |
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| Summary: | Islamic banks (IBs) must guarantee that all of their products and operations are Shari'ah compliant, and therefore, IBs have unique agency issues which give rise to different agency conflicts. For that, IBs have unique board governance structure, i.e. Shari'ah supervisory board (SSB) besides board of directors (BoD). Given there is a noticeable lack of empirical studies that examine the unique dual board structure and ownership structure in IBs vis-a'-vis their performance, this study aims to fill this gap in the literature. A sample of 78 IBs is employed from the GCC countries, Southeast Asian countries, Bangladesh and Pakistan over the period 2007-2015 while the Generalized Method of Moments (GMM) - First Difference (2-step) was used to analyze the panel data. The study contributes to the literature by providing empirical evidence across jurisdictions on the impact of dual board structure on IBs performance. Furthermore, the study provides evidence on how SSB affects IBs performance by considering the differences across jurisdictions in SG structure models ((Centralized SG model (CSGM) vs. decentralized SG model (DSGM)) and SG regulatory models (Pro-active vs. Minimalist), as well as the impact of the financial crisis of 2008. The study also examines the moderating effect of ownership concentration on the relationship between SSB and IBs performance. Lastly, the study examines whether IBs with larger SSBs size outperform their counterparts with smaller boards, besides as whether there is any optimal SSB size that can enhance IBs performance and can be recommended to the IBs across jurisdictions. The results show that strong BoD is negatively related to performance while effective SSB is positively related even during crisis period. It is also found that effective SSB positively moderates the relationship between strong BoD and performance of IBs. The results indicate that the IBs with more effective SSBs demonstrate higher levels of performance when they are located in jurisdictions that adopt CSGM and Pro-active models. The results also present that ownership concentration and effective SSB are segmented in IBs in terms of performance as measured by accounting ratios and integrated in IBs in terms of performance as measured by the market-based measurement and Islamic performance measurement (Zakat ratio). The findings highlight the importance of small SSB size in enhancing the performance of IBs as compared to large board size, besides that the optimal SSB size is between three and seven, more specifically, the optimal SSB size seems to be four or five. The findings confirm the need for SSB scholars in IBs with higher doctoral qualification and reputation and with less cross-membership during crisis and non-crisis periods. |
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| Physical Description: | xvii, 276 leaves : illustrations ; 30cm. |
| Bibliography: | Includes bibliographical references (leaves 245-268). |