IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v78y2023ics0927538x23000422.html
   My bibliography  Save this article

Funding liquidity in Islamic banks: Does the Shariah supervisory board's higher educational attainment matter?

Author

Listed:
  • Safiullah, Md

Abstract

This study investigates whether higher educational attainment (i.e., doctorate degrees) of Shariah supervisory board (SSB) members is relevant to funding liquidity in Islamic banks. Using a firm fixed effects regression framework with data from 63 Islamic banks in 10 countries, we find that higher educational attainment of SSB members increases funding liquidity. We also show that the result holds when we employ subsample analysis for countries with a national-level Shariah regulatory authority, a systematically important Islamic banking sector, and young and small Islamic banks. Our results remain consistent after employing the alternative estimation techniques of change analysis, propensity score-matching analysis, and instrumental variable approach.

Suggested Citation

  • Safiullah, Md, 2023. "Funding liquidity in Islamic banks: Does the Shariah supervisory board's higher educational attainment matter?," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:pacfin:v:78:y:2023:i:c:s0927538x23000422
    DOI: 10.1016/j.pacfin.2023.101976
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X23000422
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2023.101976?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Farag, Hisham & Mallin, Chris & Ow-Yong, Kean, 2018. "Corporate governance in Islamic banks: New insights for dual board structure and agency relationships," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 54(C), pages 59-77.
    2. Safiullah, Md & Shamsuddin, Abul, 2018. "Risk in Islamic banking and corporate governance," Pacific-Basin Finance Journal, Elsevier, vol. 47(C), pages 129-149.
    3. Chen, Hsiang-Lan & Hsu, Wen-Tsung & Chang, Chiao-Yi, 2016. "Independent directors’ human and social capital, firm internationalization and performance implications: An integrated agency-resource dependence view," International Business Review, Elsevier, vol. 25(4), pages 859-871.
    4. Farihana Shahari & Roza Hazli Zakaria & Md. Saifur Rahman, 2015. "Investigation of the expected loss of sharia credit instruments in global Islamic banks," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 11(4), pages 503-512, September.
    5. Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2014. "Executive board composition and bank risk taking," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 48-65.
    6. Bertay, Ata Can & Demirgüç-Kunt, Asli & Huizinga, Harry, 2013. "Do we need big banks? Evidence on performance, strategy and market discipline," Journal of Financial Intermediation, Elsevier, vol. 22(4), pages 532-558.
    7. Kose John & Lubomir Litov & Bernard Yeung, 2008. "Corporate Governance and Risk‐Taking," Journal of Finance, American Finance Association, vol. 63(4), pages 1679-1728, August.
    8. Thomas Dalziel & Richard J. Gentry & Michael Bowerman, 2011. "An Integrated Agency–Resource Dependence View of the Influence of Directors' Human and Relational Capital on Firms' R&D Spending," Journal of Management Studies, Wiley Blackwell, vol. 48, pages 1217-1242, September.
    9. Orlando Curtae' Richard & Jie Wu & Livia Anna Markoczy & Yunhyung Chung, 2019. "Top management team demographic‐faultline strength and strategic change: What role does environmental dynamism play?," Strategic Management Journal, Wiley Blackwell, vol. 40(6), pages 987-1009, June.
    10. Farihana Shahari & Roza Hazli Zakaria & Md. Saifur Rahman, 2015. "Investigation of the expected loss of sharia credit instruments in global Islamic banks," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 11(4), pages 503-512, September.
    11. Safiullah, Md & Shamsuddin, Abul, 2019. "Risk-adjusted efficiency and corporate governance: Evidence from Islamic and conventional banks," Journal of Corporate Finance, Elsevier, vol. 55(C), pages 105-140.
    12. Farihana Shahari & Roza Hazli Zakaria & Md. Saifur Rahman, 2015. "Investigation of the expected loss of sharia credit instruments in global Islamic banks," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 11(4), pages 503-512, September.
    13. Pejman Abedifar & Philip Molyneux & Amine Tarazi, 2013. "Risk in Islamic Banking," Review of Finance, European Finance Association, vol. 17(6), pages 2035-2096.
    14. Vu Quang Trinh & Marwa Elnahass & Aly Salama & Marwan Izzeldin, 2020. "Board busyness, performance and financial stability: does bank type matter?," The European Journal of Finance, Taylor & Francis Journals, vol. 26(7-8), pages 774-801, May.
    15. Meslier, Céline & Risfandy, Tastaftiyan & Tarazi, Amine, 2020. "Islamic banks’ equity financing, Shariah supervisory board, and banking environments," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    16. Hassan, M. Kabir & Khan, Ashraf & Paltrinieri, Andrea, 2019. "Liquidity risk, credit risk and stability in Islamic and conventional banks," Research in International Business and Finance, Elsevier, vol. 48(C), pages 17-31.
    17. Larcker, David F. & Rusticus, Tjomme O., 2010. "On the use of instrumental variables in accounting research," Journal of Accounting and Economics, Elsevier, vol. 49(3), pages 186-205, April.
    18. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    19. Safiullah, Md, 2021. "Stability efficiency in Islamic banks: Does board governance matter?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    20. Laeven, Luc & Levine, Ross, 2009. "Bank governance, regulation and risk taking," Journal of Financial Economics, Elsevier, vol. 93(2), pages 259-275, August.
    21. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
    22. Khan, Muhammad Saifuddin & Scheule, Harald & Wu, Eliza, 2017. "Funding liquidity and bank risk taking," Journal of Banking & Finance, Elsevier, vol. 82(C), pages 203-216.
    23. Demsetz, Rebecca S & Strahan, Philip E, 1997. "Diversification, Size, and Risk at Bank Holding Companies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 300-313, August.
    24. Rosman, Romzie & Wahab, Norazlina Abd & Zainol, Zairy, 2014. "Efficiency of Islamic banks during the financial crisis: An analysis of Middle Eastern and Asian countries," Pacific-Basin Finance Journal, Elsevier, vol. 28(C), pages 76-90.
    25. Purkayastha, Anish & Karna, Amit & Sharma, Sunil & Bhadra, Dhiman, 2021. "Board’s human capital resource and internationalization of emerging market firms: Toward an integrated agency–resource dependence perspective," Journal of Business Research, Elsevier, vol. 135(C), pages 391-407.
    26. Safiullah, Md, 2020. "Bank governance and crisis-period efficiency: A multinational study on Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    27. Katalin Takacs Haynes & Amy Hillman, 2010. "The effect of board capital and CEO power on strategic change," Strategic Management Journal, Wiley Blackwell, vol. 31(11), pages 1145-1163, November.
    28. Khan, Mushtaq Hussain & Fraz, Ahmad & Hassan, Arshad & Abedifar, Pejman, 2020. "Female board representation, risk-taking and performance: Evidence from dual banking systems," Finance Research Letters, Elsevier, vol. 37(C).
    29. Saad Azmat & A. S. M. Sohel Azad & M. Ishaq Bhatti & Hamza Ghaffar, 2020. "Islamic Banking, Costly Religiosity, And Competition," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 43(2), pages 263-303, May.
    30. Igor Filatotchev & Mike Wright, 2011. "Agency Perspectives on Corporate Governance of Multinational Enterprises," Journal of Management Studies, Wiley Blackwell, vol. 48(2), pages 471-486, March.
    31. Cheng, Louis T.W. & Chan, Ricky Y.K. & Leung, T.Y., 2010. "Management demography and corporate performance: Evidence from China," International Business Review, Elsevier, vol. 19(3), pages 261-275, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Safiullah, Md, 2021. "Stability efficiency in Islamic banks: Does board governance matter?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    2. Safiullah, Md & Hassan, M. Kabir & Kabir, Md Nurul, 2022. "Corporate governance and liquidity creation nexus in Islamic banks—Is managerial ability a channel?," Global Finance Journal, Elsevier, vol. 51(C).
    3. Mushtaq Hussain Khan & Mohammad Bitar & Amine Tarazi & Arshad Hassan & Ahmad Fraz, 2021. "Corruption and bank risk-taking: The deterring role of Shari'ah supervision," Working Papers hal-03366460, HAL.
    4. Safiullah, Md, 2020. "Bank governance and crisis-period efficiency: A multinational study on Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    5. Safiullah, Md & Miah, Mohammad Dulal & Azad, Asm Sohel & Hassan, M. Kabir, 2024. "Does the board of directors influence Shariah governance in Islamic banks?," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    6. Elnahass, Marwa & Salama, Aly & Trinh, Vu Quang, 2022. "Firm valuations and board compensation: Evidence from alternative banking models," Global Finance Journal, Elsevier, vol. 51(C).
    7. Abid, Ammar & Gull, Ammar Ali & Hussain, Nazim & Nguyen, Duc Khuong, 2021. "Risk governance and bank risk-taking behavior: Evidence from Asian banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    8. Smaoui, Houcem & Mimouni, Karim & Miniaoui, Héla & Temimi, Akram, 2020. "Funding liquidity risk and banks' risk-taking: Evidence from Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 64(C).
    9. Quang Trinh, Vu & Elnahass, Marwa & Duong Cao, Ngan, 2021. "The value relevance of bank cash Holdings: The moderating effect of board busyness," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 73(C).
    10. Vallascas, Francesco & Mollah, Sabur & Keasey, Kevin, 2017. "Does the impact of board independence on large bank risks change after the global financial crisis?," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 149-166.
    11. Hasan, Mostafa Monzur & Cheung, Adrian (Wai Kong) & Taylor, Grantley, 2020. "Financial statement comparability and bank risk-taking," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(3).
    12. Elnahass, Marwa & Alharbi, Rana & Mohamed, Toka S. & McLaren, Josie, 2023. "The Nexus among board diversity and bank stability: Implications from gender, nationality and education," Emerging Markets Review, Elsevier, vol. 57(C).
    13. Safiullah, Md & Shamsuddin, Abul, 2018. "Risk in Islamic banking and corporate governance," Pacific-Basin Finance Journal, Elsevier, vol. 47(C), pages 129-149.
    14. Bhagat, Sanjai & Bolton, Brian & Lu, Jun, 2015. "Size, leverage, and risk-taking of financial institutions," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 520-537.
    15. Safiullah, Md, 2021. "Financial stability efficiency of Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    16. Trinh, Vu Quang & Aljughaiman, Abdullah A. & Cao, Ngan Duong, 2020. "Fetching better deals from creditors: Board busyness, agency relationships and the bank cost of debt," International Review of Financial Analysis, Elsevier, vol. 69(C).
    17. Galletta, Simona & Mazzù, Sebastiano & Scannella, Enzo, 2021. "Risk committee complexity and liquidity risk in the European banking industry," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 691-703.
    18. Miah, Mohammad Dulal & Kabir, Md. Nurul & Safiullah, Md, 2020. "Switching costs in Islamic banking: The impact on market power and financial stability," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).
    19. Risfandy, Tastaftiyan & Tarazi, Amine & Trinugroho, Irwan, 2022. "Competition in dual markets: Implications for banking system stability," Global Finance Journal, Elsevier, vol. 52(C).
    20. Yousaf, Umair Bin & Ullah, Irfan & Jiang, Junchen & Wang, Man, 2022. "The role of board capital in driving green innovation: Evidence from China," Journal of Behavioral and Experimental Finance, Elsevier, vol. 35(C).

    More about this item

    Keywords

    Funding liquidity; Education; Shariah board; Islamic banking;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:78:y:2023:i:c:s0927538x23000422. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.