A comparative analysis of corporate governance and bank performance: ıslamic banks versus conventional banks

Ulussever, Talat

doi:10.17261/pressacademia.2018.815

Cited by 19 publications

(18 citation statements)

References 28 publications

(38 reference statements)

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“…In other words, a large board has a variety of knowledge and experience and improves control and bank soundness. This finding is supported by the resource dependency theory and the previous research findings (Almutairi and Quttainah, 2017; Ulussever, 2018; Naveed and Abdin, 2020; Rashid et al , 2020).…”

Section: Resultssupporting

confidence: 87%

“…Moreover, a large board improves control, makes effective decisions and meets the stakeholders' needs (Pfeffer, 1972;Fama and Jensen, 1983). Many researchers show that a large board is positively associated with financial performance and can better manage risk to avoid bankruptcy (Almutairi and Quttainah, 2017;Hakimi et al, 2018;Ulussever, 2018;Naveed and Abdin, 2020). The BNM (2013) Guide states that the number of directors is an important tool in assessing the board's efficiency.…”

Section: Sizementioning

confidence: 99%

“…In the past few decades, Islamic banks have rapidly grown in both number and size in many countries around the world because of the increasing demand from customers who are more inclined to engage with banks that comply with Sharīʿah principles (Lassoued, 2018; Aslam and Haron, 2020; Mesliera et al , 2020). According to Ulussever (2018), the financial assets of the Islamic financial sector grew 50% faster than the overall banking sector, with an annual growth average of 17.6% during the period 2008–2012 and reached US$1.7tn in 2013. Plus, Islamic finance assets are expected to achieve US$6.5tn in 2020.…”

Section: Introductionmentioning

confidence: 99%

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Financial soundness of Islamic banks: does the structure of the board of directors matter?

Khalil

Slimene

2021

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Purpose The purpose of this paper is to examine the Board of Directors’ characteristics and their impact on the financial soundness of Islamic banks. Design/methodology/approach Regression analysis is applied to test the impact of the Board of Directors’ characteristics on the financial soundness of Islamic banks, using a panel data set of 67 Islamic banks covering 20 countries from 2005 to 2018. The Z-score indicator is used to evaluate the Islamic banks’ soundness. To check the robustness of the results, this paper uses other dependent variables (CAMEL) than the Z-score. Findings The main results show that the presence of an independent non-executive director negatively impacts the financial soundness of Islamic banks, while the chief executive officer duality practice has a positive effect on it. Other characteristics of the Board of Directors do not significantly impact the financial soundness of Islamic banks (foreign director, institutional director, chairman with a Shari’ah degree, interlocked chairman and the Board of Directors’ size). Practical implications This study aims to fill the gaps in the literature that discuss the Board of Directors’ role in corporate governance and its impact on the financial soundness of Islamic banks. In other words, it shows the role played by the Board of Directors and improves the knowledge of the corporate governance-financial soundness relationship. Plus, managers, investors and regulators may gain evocative insights, particularly those looking to improve their Islamic banks’ soundness by restructuring their boards’ composition. Originality/value This study sheds new light on the literature on Islamic banking by clarifying the relationship between the Board of Directors and the financial soundness of Islamic banks. Contrary to previous research, this paper uses an additional hypothesis stating that a chairman with a Shari’ah degree (Fiqh Muamalt) has a positive impact on the financial soundness of Islamic banks.

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Section: Resultssupporting

confidence: 87%

Section: Sizementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Financial soundness of Islamic banks: does the structure of the board of directors matter?

Khalil

Slimene

2021

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“…Al-Kayed (2017) found that profitability, lagged dividends and leverage are significant determinants of Islamic Bank's dividend policy. Ulussever (2018) conclude that boards are strong and the CEOs are powerful in Islamic banks. The return variables of Islamic banks were found positively correlated with the financial disclosure index and board structure variables and negatively correlated with the risk closure index.…”

Section: Literature Reviewmentioning

confidence: 92%

Islamic Banking Performance Versus Conventional Banking

Alqatan¹,

Sbeiti²

2021

R. Econ. and Finan.

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The paper revisits the issue of the financial performance of Islamic banks in comparison to conventional banks. It focuses on financial performance measured by accounting data rather than looking only at stock market performance. This paper will list down all revenues, net profits, total assets and total liabilities of both conventional and Sharia banks to form a comprehensive stand on which form of banking has a significant lead over the other. The data will be collected from a ten-year time series. The study will analyze and interpret the change in the performance of a sample of shariah-compliant banks in relation to a sample of conventional banks. A random sampling method would be followed for unbiased results. The findings would be formed through a series of accounting ratios and the calculation of standard deviation and variance. This study aims to put an end to all doubts regarding the efficiency of shariah-compliant and conventional banks.

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“…In the last few decades, Islamic banks has rapidly grown in both size and number in the world due to the increasing demand from customers who are motivated to engage with banks that comply with shariah laws (Lassoued, 2018;Nomran et al, 2018). Ulussever (2018) says that the financial assets of the Islamic financial sector grew 50% faster than the other banking sector and achieved US$1.7 trillion in 2013. The financial assets of Islamic institutions are expected to reach US$6.5 trillion in 2020.…”

Section: Introductionmentioning

confidence: 99%

Effect of The Board of Director's Characteristic On Islamic Bank's Financial Soundness

Khalil¹

2021

TIFBR

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The aims of this study is to diagnose the Board of Director’s characteristics and its impact on the financial soundness of Islamic banks. Regression analysis are applied to test the effect of the Board of Director's characteristics on the financial soundness of Islamic banking, employing a panel data composed of 67 Islamic banks during the period 2005-2014. The level of Islamic bank soundness is individually using the Z-score indicator. To verify the robustness of results, we use other dependent variables (CAMEL) than the Z-score for the year 2018. Results show that the independent non-executive director, the foreign director and the institutional director, have a negative and significant impact on the financial soundness of Islamic banks. While, the Board of Director’s size does not have any significant effect on the financial soundness of Islamic banks.This research contributes to fill the gaps in the literature that discussed the Board of Directors’ role in the corporate governance of Islamic banking. In other words, it shows the role played by the Board of Director and improves our knowledge of the financial soundness-corporate governance relationship. With this paper, we hope to clarify the relationship between the Board of Director and the financial soundness of Islamic banks and provide new insights to the literature review. This study offers practical and valuable implications for banking associations, researchers and regulators. In other words, in addition to its theoretical and scientific value, this paper is practical and useful for professionals.

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A comparative analysis of corporate governance and bank performance: ıslamic banks versus conventional banks

Cited by 19 publications

References 28 publications

Financial soundness of Islamic banks: does the structure of the board of directors matter?

Financial soundness of Islamic banks: does the structure of the board of directors matter?

Islamic Banking Performance Versus Conventional Banking

Effect of The Board of Director's Characteristic On Islamic Bank's Financial Soundness

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