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Shari’ah supervision, corporate governance and performance: conventional vs. Islamic banks

Mollah, Sabur; Zaman, Mahbub

Authors

Sabur Mollah



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 but also emphasize the need for enforcement and regulatory mechanism for them to be more effective.

Citation

Mollah, S., & Zaman, M. (2015). Shari’ah supervision, corporate governance and performance: conventional vs. Islamic banks. Journal of Banking and Finance, 58, 418-435 . https://doi.org/10.1016/j.jbankfin.2015.04.030

Journal Article Type Article
Acceptance Date Apr 18, 2015
Online Publication Date Jun 12, 2015
Publication Date 2015-09
Deposit Date Nov 23, 2016
Publicly Available Date Nov 23, 2016
Journal Journal of banking and finance
Print ISSN 0378-4266
Electronic ISSN 1872-6372
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 58
Pages 418-435
DOI https://doi.org/10.1016/j.jbankfin.2015.04.030
Keywords Shari’ah supervision, Corporate governance, Islamic banks, Boards of directors, Ethical banking
Public URL https://hull-repository.worktribe.com/output/445561
Publisher URL http://www.sciencedirect.com/science/article/pii/S0378426615001648
Additional Information This article is maintained by: Elsevier; Article Title: Shari’ah supervision, corporate governance and performance: Conventional vs. Islamic banks; Journal Title: Journal of Banking & Finance; CrossRef DOI link to publisher maintained version: http://dx.doi.org/10.1016/j.jbankfin.2015.04.030; Content Type: article; Copyright: Copyright © 2015 Elsevier B.V. All rights reserved.

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