The effect of corporate governance on bank financial performance: evidence from the Arabian Peninsula

Basuony, Mohamed A. K.; Mohamed, Ehab K. A.; Al-Baidhani, Ahmed Mohsen

doi:10.22495/cocv11i2c1p3

Cited by 35 publications

(5 citation statements)

References 91 publications

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“…Sharia governance is a mechanism used by the Islamic financial institutions to ensure the compliance with the requirements of the Sharia laws and regulations and mitigating the Sharia non-compliance risk (Basuony et al , 2014; Savitri et al , 2020). The uniqueness of the Islamic financial institutions is shown through the abiding of the Sharia law besides following the other laws of the land (Atif et al , 2021a; Hassan et al , 2020).…”

Section: Results Of the Studymentioning

confidence: 99%

Sharia governance standards and the role of AAOIFI: a comprehensive literature review and future research agenda

Hassan

Rabbani²

2022

JIABR

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Purpose The purpose of this study is to investigate the role of Auditing and Accounting Organization for Islamic Financial Institution (AOIFI) governance disclosure on the performance of Islamic financial institutions (IFIs) through systematic literature review approach. Design/methodology/approach This study is based on the review of literature related to the AAOIFI accounting standards downloaded from Scopus database. This study includes review of 126 research articles, 10 review papers, 9 book chapters and 5 conference papers related to different roles played by AAOIFI in providing standards for accounting, auditing, governance and ethics for global IFIs. Findings The findings of this study suggest that AAOIFI has played a critical role in developing the accounting standards for the IFIs and contributed positively to the overall growth of the Islamic finance industry. Practical implications AAOIFI has played a critical role in issuing and development of accounting and auditing standards and has contributed positively to the financial performance of IFIs. Research gaps are identified, and there is a need to work on these gaps. Originality/value This study will contribute to the understanding the role of AAOIFI in issuing and development of accounting and governance standards and future research agenda based on a thorough review of literature.

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Section: Results Of the Studymentioning

confidence: 99%

Sharia governance standards and the role of AAOIFI: a comprehensive literature review and future research agenda

Hassan

Rabbani²

2022

JIABR

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“…Some authors (Coles et al, 2008;Khanchel El Mehdi, 2007;Zakaria et al, 2018) assert that independent directors' significant presence improves a company's performance. Likewise, Basuony et al (2014) found a significant relationship between the independent directors' presence and the financial performance of 50 banks in the Arabian Peninsula in 2011. In fact, for Fama & Jensen (1983), having a large percentage of independent external individuals on the board is a good sign for performance through improvements in decision deliberation and board's experience.…”

Section: Administrators' Independence and Performancementioning

confidence: 93%

The financial impacts of board mechanisms on performance: The case of listed Moroccan banks

Idrissi

Alami

2021

IJFAM

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Purpose: The present study examines the impact of corporate governance mechanisms on listed Moroccan banks' financial performance. Research methodology: This study investigates the relationship between listed banks' governance mechanisms and financial performance in the CSE for six years between 2014-2019. This study employs three performance measures, return on assets, return on equity, and Tobin's Q, to determine bank performance. This research uses the GMM EGLS approach to analyze data. In the first phase of this empirical research, we did use OLS, Fixed Effects, and Radom Effects regressions to show their inefficiency. Results: Our results portray that most board mechanisms have a negative impact on financial performance. In comparison, the audit committee and nomination & remuneration committee have a positive effect on financial performance. Limitations: Many qualitative and quantitative factors could influence financial performance and not only the used variables in this paper. Contribution: This research shows that the dynamic connection between corporate governance and financial performance is robust in the Moroccan banking context. Also, our study has important implications for establishing good corporate governance practices in emerging economies.

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“…If this happens, then a large number of commissioners has a negative impact on performance. However, Basuony, Mohamed, & Al-Baidhani (2014) found that the number of boards had a positive influence on Tobin-Q, ROA and ROE (Almutairi & Quttainah, 2017). Meanwhile, Guest (2009) states that the number of commissioners has a negative impact on ROA.…”

Section: Literature Reviewmentioning

confidence: 99%

Islamic corporate governance and performance based on maqasid sharia index– study in Indonesia

Mukhibad

Rochmatullah

Warsina

et al. 2020

JSB

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Sharia banks and conventional banks have real differences in their objectives and operations. Therefore, performance measurements must differentiated between Sharia banks and conventional banks. One performance measure recommended by researchers is performance-based on the Maqasid sharia Index (MSI). This study is to prove the influence of the Sharia Supervisory Board attributes (number of meetings, level of education, cross-membership) and commissioners' attributes (ratio of independent commissioners, number of members, number of meetings) to performance based on MSI. The research sample is 12 Sharia banks in Indonesia during the 2014-2018 observation year. The data analysis method uses panel data analysis with a fixed effect model. We find that SSB education level and independent board ratio had a negative effect on performance based on MSI. Cross-membership; the number of SSB meetings, board size, number of board meetings, and total assets does not affect performance based on MSI. This finding indicates that MSI has not become one of the goals that must be achieved in the management of Sharia banks in Indonesia. This is because the MSI score is still low. In addition, the dominance of debt financing is a characteristic that banks prefer transactions that generate fixed income and avoid transactions that use a fairer system, i.e. the Profit and Loss Sharing system. We recommend for regulators to develop different measurement tools from conventional banks and in accordance with the objectives of sharia implementation as sharia bank business operations (maqasid sharia). Future researcher can study and develop other measurement tools in formulating maqasid sharia by involving regulators, business actors, and experts so that the produced maqasid sharia indicators can be applied by banks.

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The effect of corporate governance on bank financial performance: evidence from the Arabian Peninsula

Cited by 35 publications

References 91 publications

Sharia governance standards and the role of AAOIFI: a comprehensive literature review and future research agenda

Sharia governance standards and the role of AAOIFI: a comprehensive literature review and future research agenda

The financial impacts of board mechanisms on performance: The case of listed Moroccan banks

Islamic corporate governance and performance based on maqasid sharia index– study in Indonesia

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