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Does Corporate Governance Matter For Asset Quality Of Islamic Banks?

Author

Listed:
  • Ejaz Aslam

    (Minhaj University Lahore)

  • Aziz Ur-Rehman

    (IIUM Institute of Islamic Banking and Finance)

  • Anam Iqbal

    (IIUM Institute of Islamic Banking and Finance)

Abstract

This study investigates the impact of corporate governance on asset quality of Islamic banks by employing data on 129 Islamic banks from 29 countries spanning the period from 2008 to 2017. The study shows that asset quality of Islamic banks is positively and significantly sensitive to an increase in board independence, Shariah board, and audit committee effectiveness. The study finds that female participation in management as CEOs seems to detract from good performance and that more board meetings can be harnessed to improve banks’ asset quality. These empirical findings have practical policy implications regarding asset quality management and board construction within the Islamic banking sector.

Suggested Citation

  • Ejaz Aslam & Aziz Ur-Rehman & Anam Iqbal, 2021. "Does Corporate Governance Matter For Asset Quality Of Islamic Banks?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 221-236, June.
    • Handle: RePEc:idn:journl:v:24:y:2021:i:2d:p:221-236
    DOI: https://doi.org/10.21098/bemp.v24i2.1344
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    References listed on IDEAS

    as
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    3. Abdelaziz Chazi & Ashraf Khallaf & Zaher Zantout, 2018. "Corporate Governance And Bank Performance: Islamic Versus Non-Islamic Banks In GCC Countries," Journal of Developing Areas, Tennessee State University, College of Business, vol. 52(2), pages 109-126, April-Jun.
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    More about this item

    Keywords

    Corporate governance; 2SYS-GMM; Loan to assets; Loan to deposit; Non-performing loans; OIC countries;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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