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Introducing a Model to Measure the Corporate Governance Index in Usury-Free Banking

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  • Ghasemi Ali Abadi , Mehdi

    (Faculty of Economics, Allameh Tabataba’i University)

  • Shakeri , Abbas

    (Faculty of Economics, Allameh Tabataba’i University)

  • Nassiri Aghdam , Ali

    (Faculty of Economics, Allameh Tabataba’i University)

Abstract

Good implementation of corporate governance principles is considered as an important component for stability and soundness of a financial institution. An extensive body of literature has reviewed the effects of corporate governance on the performance of corporations. The majority of these studies have found more corporate values for implementing the principles. Therefore, the assessment of compliance with corporate governance principles is a critical factor for external inspectors to ensure long-term sustainability of any economic organization. Based on these, this research aims to introduce a mechanism for assessing corporate governance in Iranian banks. This mechanism helps to calculate points for ranking of any banks compared to other banks and with regard to the compliance with four corporate governance principles: accountability, responsibility, transparency and fairness. To this end, and based on corporate governance principles, a set of measurements, elements and sub-indices have been introduced that some of them are estimated. The value domain for each of sub-indices is determined with respect to the published information by the bank. This paper has introduced 153 sub-indices, 17 elements and 3 measures that explain corporate governance. These are all valued and altogether in the form of a suitable model, make possible to calculate the Corporate Governance Index (CGI) in a usury-free bank.

Suggested Citation

  • Ghasemi Ali Abadi , Mehdi & Shakeri , Abbas & Nassiri Aghdam , Ali, 2017. "Introducing a Model to Measure the Corporate Governance Index in Usury-Free Banking," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(1), pages 55-71, January.
    • Handle: RePEc:mbr:jmonec:v:12:y:2017:i:1:p:55-71
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    Cited by:

    1. ahmadyan , azam & Ghasemi Ali Abadi , Mehdi, 2021. "Relationship between Corporate Governance and Risk Management," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 16(4), pages 447-476, December.

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    More about this item

    Keywords

    Corporate Governance Index; Assessment; Typical Bank; Usury-Free Banking;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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