Amal AlAbbad, M. Kabir Hassan and Irum Saba
The purpose of this paper is to study whether the characteristics of the Shariah Supervisory Board (SSB) can influence the risk-taking behaviors of Islamic banks.
Abstract
Purpose
The purpose of this paper is to study whether the characteristics of the Shariah Supervisory Board (SSB) can influence the risk-taking behaviors of Islamic banks.
Design/methodology/approach
The data on governance were collected from 70 Islamic banks’ annual reports across 18 countries for the period from 2000 to 2011 to investigate the relationship between SSB’s characteristics including size, busyness and foreign board and the Islamic banks’ risk activities.
Findings
The size of SSB and the proportion of busy board in SSB positively and significantly influence Islamic banks’ asset return and insolvency risks. Foreign members are more effective in monitoring banks’ Shariah compliance. Further analysis provides some evidence that most of the findings on the associations between the SSB structure and bank risk are derived from countries in the Gulf Cooperation Council where Shariah governance is ruled internally at the bank level.
Practical implications
There is a need for better Shariah board characteristics in place that complement with other governance mechanisms to well comprehend the main purpose of Islamic banks.
Originality/value
SSB board busyness and foreign characteristics appear to influence the risk-taking behaviors of Islamic banks.
Details
Keywords
The aim of this paper is to investigate and to measure the efficiency of Islamic banks through a comparative study with their conventional counterparts during the coronavirus…
Abstract
Purpose
The aim of this paper is to investigate and to measure the efficiency of Islamic banks through a comparative study with their conventional counterparts during the coronavirus period for the case of MENA region.
Design/methodology/approach
Indeed, this study will use the parametric method for a panel of 92 banks, including 27 Islamic banks and 65 conventional banks, over a ten-year period (2012–2021) and from eight MENA countries, namely, Bahrain, Egypt, Jordan, Kuwait, Qatar, UAE, Yemen and Tunisia.
Findings
The findings show that Islamic banks are more profitable than conventional banks before and during Covid-19, this result can be explained by the effectiveness of Shariah principles, differences in cost control, management and resource allocation. In addition, this study found that conventional banks outperformed Islamic banks after Covid-19.
Originality/value
This is a recent empirical study that investigates a timely and important topic.