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Board Structure And Islamic Bank Stability:A Standalone Risk Committee Moderating Effect

Author

Listed:
  • Umar Habibu Umar

    (Universiti Brunei Darussalam, Brunei Darussalam)

  • Muhamad Abduh

    (Universiti Brunei Darussalam, Brunei Darussalam)

  • Mohd Hairul Azrin Besar

    (Universiti Brunei Darussalam, Brunei Darussalam)

  • Junaidu Muhammad Kurawa

    (Bayero University Kano, Nigeria)

Abstract

This study investigates the impact of board attributes on the stability of Islamic banks and whether the presence a standalone risk management committee (SARC) moderates their relation. Applying the feasible generalized least squares (FGLS) regression as well as the two-step system generalized method of moments (GMM) estimator for robustness to a panel sample of 43 Islamic banks across 15 countries over eleven years from 2010 to 2020, we document evidence suggesting that board meetings, board gender diversity and foreign directors do not influence the stability of Islamic banks. Conversely, board members holding doctorate degrees (PhDs) significantly and negatively affect the stability of Islamic banks. In addition, the presence of SARC significantly improves the stability of Islamic banks. The study further finds that SARC partially and positively moderates the effects of board members with PhDs and foreign directors on the stability of Islamic banks.

Suggested Citation

  • Umar Habibu Umar & Muhamad Abduh & Mohd Hairul Azrin Besar & Junaidu Muhammad Kurawa, 2024. "Board Structure And Islamic Bank Stability:A Standalone Risk Committee Moderating Effect," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 10(3), pages 471-496, September.
    • Handle: RePEc:idn:jimfjn:v:10:y:2024:i:3c:p:471-496
    DOI: https://doi.org/10.21098/jimf.v10i3.1972
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    More about this item

    Keywords

    Board attributes; Standalone risk management committee; Bank stability; Risk-taking; Islamic banks;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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