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Islamic finance and governance indicators: empirical evidence from Islamic finance-permitting countries

Author

Listed:
  • Puteri Nur Balqis Megat Mazlan

    (Universiti Sains Malaysia)

  • Nafez Fayez Hersh

    (Universiti Sains Malaysia)

  • Tajul Ariffin Masron

    (Universiti Sains Malaysia)

  • Nurhafiza Abdul Kader Malim

    (Universiti Sains Malaysia)

Abstract

Despite being greatly progressive for more than 45 years covering even Muslim minority countries, the development of Islamic finance in some countries is not supported by well-established governance. This paper aims to empirically re-examine the effects of the governance components on Islamic finance in 45 Islamic finance-permitting countries. The study utilizes the dynamic panel GMM approach from the data spanning from 2012 to 2019. We find insignificant effect of regulation in Islamic finance in the region of developed countries, Muslim minority countries, and other Arab countries. We also find that corporate governance is not statistically significant in MENA and non-Asian countries. These results reinforce the need for a new type of regulation based on product requirements, policies, and procedures. Thus, the governance indicators can be understood by the wider world and assist in gaining more acceptance for the Islamic finance industry.

Suggested Citation

  • Puteri Nur Balqis Megat Mazlan & Nafez Fayez Hersh & Tajul Ariffin Masron & Nurhafiza Abdul Kader Malim, 2023. "Islamic finance and governance indicators: empirical evidence from Islamic finance-permitting countries," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(4), pages 344-358, December.
    • Handle: RePEc:pal:ijodag:v:20:y:2023:i:4:d:10.1057_s41310-023-00177-5
    DOI: 10.1057/s41310-023-00177-5
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    References listed on IDEAS

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    1. Heiko Hesse & Andreas (Andy) Jobst & Juan Solé, 2008. "Trends and Challenges in Islamic Finance," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 9(2), pages 175-193, April.
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    More about this item

    Keywords

    Islamic finance; Governance; Corporate governance; Shariah governance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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