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Leveraging Banking Financial Performance through Shari’ah Board’s Characteristics: Empirical Investigation

Author

Listed:
  • Mehwish Rafiq

    (MS Scholar, Department of Business Administration, Institute of Southern Punjab, Multan, Pakistan)

  • Muhammad Fahad

    (MS Finance Scholar, Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistan)

  • Aisha Riaz

    (Lecturer, Department of Management Sciences, University of Okara, Okara, Pakistan)

  • Muhammad Waqas Nazir

    (PhD Scholar, School of Economics and Management, Xidian University Shaanxi, Xi'an China)

Abstract

This study examines the impact of board characteristics on the financial outcomes of Shari'ah-compliant banks in Pakistan, with a particular focus on supervisory attributes such as board size, frequency of meetings, and independence in decision-making. The empirical analysis utilizes data from all Islamic banks of Pakistan over the period from 2021 to 2023, a timeframe chosen to evaluate financial performance in the context of post-pandemic economic challenges. Employing panel data analysis through multiple regression models, the study reveals that bank size does not have a significant effect on the financial outcomes. In contrast, the board size plays a crucial role in influencing financial success. Specifically, boards that are composed of independent members that meet regularly for strategic evaluations tend to achieve better financial performance. These results emphasize the importance of enhancing Shari'ah-compliant governance structures, particularly in the context of economic recovery. The implications of these findings suggest that to improve the decision-making process, Islamic banks should focus on quality and independence in board composition and prioritize frequent strategic assessments to improve financial outcomes.

Suggested Citation

  • Mehwish Rafiq & Muhammad Fahad & Aisha Riaz & Muhammad Waqas Nazir, 2024. "Leveraging Banking Financial Performance through Shari’ah Board’s Characteristics: Empirical Investigation," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(3), pages 36-41.
    • Handle: RePEc:rfh:bbejor:v:13:y:2024:i:3:p:36-41
    DOI: https://doi.org/10.61506/
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    References listed on IDEAS

    as
    1. Achraf Haddad & Mohamed Naceur Souissi, 2022. "The impact of Shariah Advisory Board characteristics on the financial performance of Islamic banks," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2062911-206, December.
    2. Md. Kausar Alam & Suhaimi Ab Rahman & Mosab I. Tabash & Oli Ahad Thakur & Sharif Hosen, 2021. "Shariah supervisory boards of Islamic banks in Bangladesh: expected duties and performed roles and functions," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 12(2), pages 258-275, February.
    3. Fahad Asghar & Palwasha Farooq & Muhammad Nadim & Zain ul Abidin & Fazli Wadood, 2023. "Global Financial Crisis: A critical study on Role of Auditor’s and Stakeholder," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(2), pages 452-458.
    4. Nasir Ababulgu Abasimel, 2023. "Islamic Banking and Economics: Concepts and Instruments, Features, Advantages, Differences from Conventional Banks, and Contributions to Economic Growth," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1923-1950, June.
    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).
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