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Standalone risk management committee, risk governance diversity and Islamic bank risk-taking

Author

Listed:
  • Umar Habibu Umar

    (Universiti Brunei Darussalam)

  • Muhamad Abduh

    (Universiti Brunei Darussalam)

  • Mohd Hairul Azrin Besar

    (Universiti Brunei Darussalam)

Abstract

Following the global financial crisis of 2008, new policies, rules and regulations were issued to improve corporate governance (CG) practices, particularly risk management practices, with a view to reducing excessive risk-taking. Hence, this study examined the effects of a standalone risk management committee and risk governance diversity on the risk-taking of Islamic banks. We utilized a set of 389 firm-year observations hand collected from the annual reports of 43 full-fledged Islamic banks drawn from fifteen (15) countries between 2010 and 2020. The findings indicate that the presence of a standalone risk management committee and the proportion of doctor of philosophy (PhD) holders on the risk management committee have a significant negative association with the risk-taking of Islamic banks. In contrast, the proportion of female directors in the risk management committee has a significant positive association with the risk-taking of Islamic banks. We find an insignificant positive association between the proportion of foreign directors in the risk management committee and the risk-taking of Islamic banks.

Suggested Citation

  • Umar Habibu Umar & Muhamad Abduh & Mohd Hairul Azrin Besar, 2023. "Standalone risk management committee, risk governance diversity and Islamic bank risk-taking," Risk Management, Palgrave Macmillan, vol. 25(3), pages 1-23, September.
    • Handle: RePEc:pal:risman:v:25:y:2023:i:3:d:10.1057_s41283-023-00123-3
    DOI: 10.1057/s41283-023-00123-3
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    References listed on IDEAS

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