Corporate governance and credit rating in Islamic banks: Does Shariah governance matters?

Grassa, Rihab

doi:10.1007/s10997-015-9322-4

Cited by 99 publications

(183 citation statements)

References 91 publications

(99 reference statements)

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“…As this combination of expertise is in high demand, many scholars sit on the SSBs of several banks simultaneously (Haniffa and Cooke, 2002;Nathan, 2010). This leads to an independency issue and gives rise to conflicts of interest among SSB members, as they are able to obtain exclusive and critical financial information from multiple banks (Grassa, 2016;Samra, 2016). Yet Grassa (2016) argues that this helps in attracting potential investors, thereby enhancing the productivity, efficiency and eventually the performance of IBs.…”

Section: Introductionmentioning

confidence: 99%

Performance of Islamic banks

Al-Sartawi

2019

IJIF

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Purpose This paper aims to investigate the relationship between the composition of Sharīʿah supervisory boards (independence and frequency of meetings) and the performance of Islamic banks in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study developed a multiple linear regression model, and data were collected from the annual reports of 48 standalone Islamic banks listed in the GCC countries covering the period between 2013 and 2017. Findings The results showed a statistically significant and negative relationship between the composition of the Sharīʿah supervisory boards and the performance of Islamic banks. Research limitations/implications As the current study used only one indicator, that is Return on Assets to measure performance, it is recommended to expand the framework of this study, through the addition of market-based performance indicators such as Tobin’s Q. Practical implications This study recommends the GCC countries to follow a more proactive Sharīʿah governance model to strengthen their frameworks from both regulatory and non-regulatory aspects. Originality/value The study contributes to the Sharīʿah governance and Islamic banking literature relating to the GCC countries as previous studies gave no attention to the composition of Sharīʿah supervisory boards.

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Section: Introductionmentioning

confidence: 99%

Performance of Islamic banks

Al-Sartawi

2019

IJIF

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“…So the existence Sharia Supervisory Board (DPS) became important in the implementation of corporate governance in Islamic banks. Research conducted by Grassa that Islamic governance score significant positive effect against widespread disclosure of CSR [11]. Where the higher-scoring results of Islamic governance score then the higher index a meaningful ISR will more and more also disclosure of CSR which do Shafii declare Islamic governance score has however not significant positive relationship with the level of disclosure of CSR [12].…”

Section: Introductionmentioning

confidence: 99%

What Factors Cause the Disclosure of Islamic Social Reporting?

Sunarsih¹,

Cahyani²

2019

Proceedings of the 5th Annual International Conference on Accounting Research (AICAR 2018)

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This study aims to determine the effect of Sharia Governance, Intellectual Capital, profitability, and firm size on the disclosure of Islamic Social Reporting (ISR) on Islamic Banking in Indonesia registered with the Financial Services Authority for the period 2011-2015.The data in this study uses secondary data and retrieved through the site www.ojk.go.id and press release from each Islamic banking and Islamic banking 9 samples obtained are there in Indonesia. The method used is content analysis, namely by giving scoring on every item the disclosure of ISR in the Sharia banking annual report where a value of 1, if Islamic banking did its annual reports on the ISR disclosure and a value of 0, if Islamic banking is not doing its annual reports on the ISR disclosure. The results showed that sharia governance have an impact on disclosure of ISR. This suggests that the higher the Sharia Supervisory Board of trustees, then the higher is also the disclosure of ISR conducted by Islamic banking. Intellectual capital has no effect against the disclosure of ISR because of Islamic banking in Indonesia has not yet seriously enter the intellectual capital in the decision-making process, in particular the disclosure of ISR. Profitability has no effect against the disclosure of ISR, because it has a different way of looking towards disclosure of ISR and company size influence on disclosure of ISR, because the larger the asset owned Islamic banks the possibility of increasingly greater disclosure of ISR conducted by Islamic banking.

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“…Moreover, there are just a few recent papers investigating Islamic corporate governance (Najeeb & Ibrahim, 2014;Ullah et al, 2014;Wooi & Ali, 2017). The only studies attempting to evaluate the impact of Shariah scholar reputation on Islamic finance involve sukuk (Godlewski et al, 2014) and banks (Grassa, 2016;Mollah & Zaman, 2015;Mollah et al, 2017). In the case of sukuk, Godlewski et al (2014) show that the reputation and proximity of Shariah scholars have a beneficial influence on stock market reactions to sukuk issuance.…”

Section: Te Ra Tu R E Re V I Ew a N D Re S Ea R Ch Qu Esti Onmentioning

confidence: 99%

“…Second, we contribute to governance and board composition issues by explicitly considering the impact that the characteristics of Islamic scholars (Ullah et al, 2014) can have on Islamic portfolios through the Islamic screening criteria they impose. In fact, while there are few studies investigating the impact of Shariah boards on Islamic bank performance (Mollah, Hassan, Al Farooque, & Mobarek, 2017;Mollah & Zaman, 2015), ratings (Grassa, 2016) and Islamic bonds, or sukuk (Godlewski, Turk-Ariss, & Weill, 2014), there is a dearth of literature dealing with the impact of Shariah boards on Islamic indices' risk and performance.…”

Section: Introductionmentioning

confidence: 99%

The effects of Shariah board composition on Islamic equity indices' performance

Hassan

Miglietta

Paltrinieri

et al. 2018

Business Ethics: A Eur Rev

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Based on a sample of 54 Islamic indices over the period 2007–2014, we investigate the effect of Shariah board members' educational background on Islamic indices' risk and return characteristics via the screening criteria. Using a capital asset pricing model benchmark analysis, we assess the sensitivity of Islamic indices to their conventional peers in terms of beta and derive a measure of return (Jensen's alpha). First, we observe that the higher the number of members in common among the boards, the higher the risk–return profile of Islamic indices. Second, commonalities among board members lead to standardization of the screening criteria and to similar Islamic indices' performance. Third, we show that different betas across providers depend on the screening criteria, while the economic educational background of board members affects performance in terms of Jensen's alpha. Our study aims at contributing to the governance literature related to board composition and its importance as a possible driver of performance. In addition, given the impressive growth that Islamic finance has experienced during the last decade, this topic is of great interest to the asset management industry.

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Corporate governance and credit rating in Islamic banks: Does Shariah governance matters?

Cited by 99 publications

References 91 publications

Performance of Islamic banks

Performance of Islamic banks

What Factors Cause the Disclosure of Islamic Social Reporting?

The effects of Shariah board composition on Islamic equity indices' performance

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