Chapter 4 Corporate Governance in Comparative Islamic Perspective

Choudhury, Masudul Alam; Hoque, Mohammad Ziaul

doi:10.1108/978-1-78973-007-420191004

Cited by 4 publications

(9 citation statements)

References 8 publications

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“…argue that the institutions most fearful of fintech firms are banks, based on studies in GCC countries. Consistent with Chishti and Barberis (2016), Brandl & Hornuf, 2020, and Puschmann (2017, we argue that any firm that applies innovative technology to provide services previously restricted and provided by banks, such as lending, payments, or investments might eventually substitute for traditional banks and, therefore, influence banks' performance.…”

Section: Fintech Firms' Growth and Financial Performancesupporting

confidence: 69%

“…As discussed by (Beck et al, 2013;Trinh et al, 2020), IBs are prohibited from charging interest (riba) on payments, are not allowed to engage in speculation, and are based on profit and loss sharing; thus, their model is a risk-sharing one. In addition, IBs have an additional governance layer, namely shari'ah supervision boards, which are considered as the 'Supra Authority' (Choudhury & Hoque, 2019). Unlike IBs' business model, CBs deal with a risk-transferring model and have no such religious restrictions, which might allow them the freedom to improve and develop their operation systems and accommodate any changes in the sector as a whole.…”

Section: Introductionmentioning

confidence: 99%

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Does financial technology matter? Evidence from an alternative banking system

Almulla

Aljughaiman

2021

Cogent Economics & Finance

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The purpose of this study is to examine the impact of the financial technology (fintech) services provided by banks on their performance. We also investigate the influence of fintech firms' growth (as competitor firms) on banks' financial performance. We extend our analysis to investigate the differences between conventional banks (CBs) and Islamic banks (IBs) in this relationship and utilise a sample of 40 listed banks from Gulf Cooperation Countries, where fintech growth was impressive in the period 2014-2019. We find a negative relationship between fintech services and bank performance for both types of bank. Furthermore, we show that the growth of fintech firms in a country negatively influences CBs' financial performance but has no significant impact on IBs' performance. In addition, we test our hypotheses through multiple additional tests and robustness tests, such as the generalised method of moments. The findings could be relevant to banks, policy makers, and academic research.

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Section: Fintech Firms' Growth and Financial Performancesupporting

confidence: 69%

Section: Introductionmentioning

confidence: 99%

Does financial technology matter? Evidence from an alternative banking system

Almulla

Aljughaiman

2021

Cogent Economics & Finance

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“…Also, most of the previous research has been investigating the issue in environments with no governmental policies regarding compliance with Islamic principles. In general, the results of the previous studies revealed low social corporate disclosure compared to the expectations (Aribi and Gao, 2010;El-Halaby and Hussainey, 2015;Farook et al, 2011;Haniffa and Hudaib, 2007;Choudhury and Alam, 2013;Choudhury and Hoque, 2006;Choudhury and Harahap, 2007). These observations, further, are influenced by the practice of Shari'ah governance in the banking industry.…”

Section: Introductionmentioning

confidence: 79%

“…The model of accountability in Islam originates from Tawhid (the unity of Allah). The concept of Tawhid brings broader and different dimensions of accountability in comparison with the conventional mode of accountability in Western models (Baydoun and Willett, 2000;Choudhury and Alam, 2013;Choudhury and Hoque, 2006;Choudhury and Harahap, 2007).…”

Section: Introductionmentioning

confidence: 99%

“…At the country level, different countries may adopt different policies and procedures to emphasize the level of stockholders' protection against forbidden and haram transactions in terms of the country's laws, culture, norms and institutions. The impact of country-level governance on cross-country differences in business practices and financial policies has been well documented (Abdi and Aulakh, 2012;Griffin et al, 2017;Choudhury and Alam, 2013;Choudhury and Hoque, 2006;Choudhury and Harahap, 2007). Industry practices could also affect firms in the same industry (Zervas et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Determinants ofShari’ahgovernance disclosure in financial institutions

Azid

Alnodel

2019

International Journal of Ethics and Systems

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Purpose -This paper aims to investigate factors influencing Shari'ah governance disclosure (SGD) in financial institutions.Design/methodology/approach -Using content analysis approach, 46 annual reports published in 2015 by banks and insurance companies were investigated based on a self-constructed disclosure index.Findings -The results show that the average level of voluntary disclosure of Shari'ah governance in Saudi financial institutions is 11.7 per cent, which is lower than expectations Moreover, regression analysis shows that industry type, ownership structure and board composition significantly determine the extent of voluntary disclosure of Shari'ah governance. Local financial institutions which are owned by non-governmental agencies are more likely to disclose voluntarily their Shari'ah governance, in particular from the banking industry.Research limitations/implications -It also bridges the gap between theory and practice and can be used to practice economic and commercial impact in teaching to influence public policy in research contributing to the body of knowledge and especially for the insurance sector and government.Social implications -It provides guidance to the ethical investors and supports them in the decisionmaking process.Originality/value -This research extends the investigation of SGD into insurance sector in a country that has a general policy about adhering to Islamic principles. Financial institutions might go beyond the country affirmations to legitimate their identity in response to the society critiques about the issue. Accordingly, internal attributes and strategies of financial institutions may play a significant role in distinguishing its compliance with Islamic principles to respond to the society critiques about financial transactions.

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Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

Khan

Fraz

Hassan

et al. 2021

JFC

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Purpose This study aims to examine whether the soundness of Islamic banks is differently affected by corruption compared to conventional counterparts. Moreover, the Shari’ah supervisory board (SSB), as a cornerstone of Islamic banking and representing a multi-layer corporate governance model, is expected to moderate the influence of corruption on soundness for Islamic banks. Design/methodology/approach This study considers a unique sample of 1,528 observations on 71 Islamic banks and 120 conventional banks operating in 11 emerging and developing Muslim countries over the 2010–2017 period. This study uses generalized least squares regression model and the coefficients are estimated by using random-effects estimator. In addition, to overcome a potential endogeneity concern for corruption and bank stability relationship, this study uses Two-Stage Least Squares regression instrumental variable estimator. Findings The authors find consistent evidence that higher levels of corruption adversely impact the soundness for conventional banks, in favor of the sand the wheel hypothesis in the corruption–development nexus. However, as expected, this study finds a less negative impact of corruption on soundness of Islamic banks. Moreover, SSB moderates the relationship between corruption and soundness of Islamic banks. The findings are robust to a battery of alternative checks. Research limitations/implications Findings of the paper regarding the detrimental impact of corruption on bank soundness justify the urgency of the anti-corruption campaigns in these countries, particularly for conventional banks. Moreover, the findings provide support for the positive contribution of SSBs to overcome the adverse effect of corruption on soundness of Islamic banks and thereby underscoring the need for enforcement and regulatory mechanism for SSBs to be more effective. Originality/value To the best of the authors’ knowledge, this is the first study to examine the moderating impact of Shari’ah supervision on the relationship between corruption and soundness of Islamic banks.

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Chapter 4 Corporate Governance in Comparative Islamic Perspective

Cited by 4 publications

References 8 publications

Does financial technology matter? Evidence from an alternative banking system

Does financial technology matter? Evidence from an alternative banking system

Determinants ofShari’ahgovernance disclosure in financial institutions

Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

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