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Strong Boards and Risk-taking in Islamic Banks

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  • Sabur Mollah

    (School of Management, Swansea University)

  • Michael Skully

    (Monash University)

  • Eva Liljeblom

    (Hanken School of Economics)

Abstract

This paper examines whether variations in strong boards explain the differences between risk-taking in Islamic and conventional banks. From an analysis of a pooled sample of Islamic and conventional banks, we find that strong boards in general serve their shareholders through engaging in higher risk-taking activities across both types of banks. In Islamic banks, however, the Shari'ah Supervisory Board (SSB) is found to mitigate risk-taking when integrated with a strong board, as religiosity restrains risk-taking.

Suggested Citation

  • Sabur Mollah & Michael Skully & Eva Liljeblom, 2018. "Strong Boards and Risk-taking in Islamic Banks," Working Papers 2018-08, Swansea University, School of Management.
    • Handle: RePEc:swn:wpaper:2018-08
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    More about this item

    Keywords

    Strong Board; SSB; Religiosity; Risk-Taking; Islamic Banks; and Conventional Banks.;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • 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

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