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Is Corporate Governance Different for Islamic Banks? A Comparative Analysis between the Gulf Cooperation Council Context and the Southeast Asia Context

Author

Listed:
  • Hamadi Matoussi

    (Manouba University)

  • Rihab Grassa

Abstract

Islamic banks are particular financial institutions generating distinct corporate governance challenges. The present study examines corporate governance in Islamic banking firms in both Gulf cooperation Council countries and Southeast Asia countries. In particular, we study corporate governance variables identified as relevant by academics and practitioners and describe their differences and similarities vis à vis conventional banking firms. As well as we investigate the differences and resemblances of corporate governance characteristics of Islamic banking in GCC countries vis à vis Islamic banking in southeast Asia countries. Moreover, this paper studies the impact of relevant corporate governance variables identified by our study on the financial performance of Islamic banks. Investigation relies on a sample of 90 larges Islamic Banks over the period 2000-2009. Our findings reveal that there are several divergences between corporate governance characteristics of Islamic banks and those in conventional banks. As well, there are many differences between corporate governance characteristics of Islamic banks in GCC countries and those in Southeast Asia countries. Moreover, we find that board fees, CEO duality and age have a positive and significant effect on the performance of Islamic banks. However, the Sharia Supervisory Board characteristics don’t affect the financial performance of Islamic banks.

Suggested Citation

  • Hamadi Matoussi & Rihab Grassa, 2012. "Is Corporate Governance Different for Islamic Banks? A Comparative Analysis between the Gulf Cooperation Council Context and the Southeast Asia Context," Working Papers 734, Economic Research Forum, revised 2012.
    • Handle: RePEc:erg:wpaper:734
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    References listed on IDEAS

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    1. Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
    2. Taïeb Hafsi & Lachemi Siagh & Alpha-Oumar Diallo, 2007. "Environnement intense et choix stratégiques. Le cas des banques islamiques," Revue française de gestion, Lavoisier, vol. 171(2), pages 119-140.
    3. Levine,Ross Eric, 2004. "The Corporate Governance of Banks - a concise discussion of concepts and evidence," Policy Research Working Paper Series 3404, The World Bank.
    4. Majdi Anwar Quttainah, 2011. "Do Islamic Banks Employ Less Earnings Management?," Working Papers 645, Economic Research Forum, revised 10 Jan 2011.
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    Cited by:

    1. Ahmed Bouteska, 2020. "Do Board Characteristics Affect Bank Performance? Evidence from the Eurozone," Journal of Asset Management, Palgrave Macmillan, vol. 21(6), pages 535-548, October.
    2. Rita Wijayanti & Doddy Setiawan, 2022. "Social Reporting by Islamic Banks: The Role of Sharia Supervisory Board and the Effect on Firm Performance," Sustainability, MDPI, vol. 14(17), pages 1-25, September.
    3. Fauziah Mahat & Noor Azman Ali, 2015. "The Roles of Risk Governance on Islamic Banking Systems," Proceedings of International Academic Conferences 2705187, International Institute of Social and Economic Sciences.
    4. Ahmad Ali Jan & Fong-Woon Lai & Muhammad Umar Draz & Muhammad Tahir & Syed Emad Azhar Ali & Muhammad Zahid & Muhammad Kashif Shad, 2022. "Integrating sustainability practices into islamic corporate governance for sustainable firm performance: from the lens of agency and stakeholder theories," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(5), pages 2989-3012, October.
    5. Cedrix Ngandop Djeutcheu, 2019. "Ownership Structure and Islamic Banks Performance: An Empirical and Multiregional Tests Before, During and after the Last Global Financial Crisis," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 202-218.
    6. Zulkufly Ramly & Nurusysyifa Nordin, 2018. "Sharia Supervision Board, Board Independence, Risk Committee and Risk-taking of Islamic Banks in Malaysia," International Journal of Economics and Financial Issues, Econjournals, vol. 8(4), pages 290-300.
    7. repec:mth:ijafr8:v:8:y:2018:i:3:p:140-155 is not listed on IDEAS

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