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Is corporate governance different for Islamic banks? A comparative analysis between the Gulf Cooperation Council and Southeast Asian countries

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  • Rihab Grassa
  • Hamadi Matoussi

Abstract

Islamic banks are particular financial institutions which generate distinct corporate governance challenges. This study compares the corporate governance attributes between Islamic and conventional banks in the Gulf Cooperation Council (GCC) and in Southeast Asian countries. Moreover, this paper studies the impact of relevant corporate governance variables on the Islamic banks' performance. The sample included 77 large Islamic banks and 85 conventional banks observed over the period 2000-2009. Our findings revealed that there were several divergences between the corporate governance characteristics of Islamic banks and those of conventional banks. These differences originated mainly from the ethical aspects dominating the activities of Islamic banks and the regulatory environment in which they operate. Moreover, we found that board fee, CEO duality and CEO age had a significantly positive effect on the Islamic banks' performance. However, the Shariah board characteristics seemed to be a value creator for Islamic banks.

Suggested Citation

  • Rihab Grassa & Hamadi Matoussi, 2014. "Is corporate governance different for Islamic banks? A comparative analysis between the Gulf Cooperation Council and Southeast Asian countries," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 9(1), pages 27-51.
    • Handle: RePEc:ids:ijbget:v:9:y:2014:i:1:p:27-51
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    Citations

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    Cited by:

    1. 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.
    2. Gulati, Rachita, 2022. "Bank ownership and governance quality in India: Evolution and detection of convergence clubs," The North American Journal of Economics and Finance, Elsevier, vol. 62(C).
    3. Rihab Grassa, 2016. "Corporate governance and credit rating in Islamic banks: Does Shariah governance matters?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(4), pages 875-906, December.
    4. Rachita Gulati, 2022. "Does regulatory under‐compliance with governance standards lead to bank instability? An exploration using Indian data," Australian Economic Papers, Wiley Blackwell, vol. 61(1), pages 138-180, March.
    5. Kok, Seng Kiong & Giorgioni, Gianluigi & Farquhar, Stuart, 2022. "The trade-off between knowledge accumulation and independence: The case of the Shariah supervisory board within the Shariah governance and firm performance nexus," Research in International Business and Finance, Elsevier, vol. 59(C).
    6. Fatmawati, Dewi & Ariffin, Noraini Mohd. & Abidin, Nor Hafizah Zainal & Osman, Ahmad Zamri, 2022. "Shariah governance in Islamic banks: Practices, practitioners and praxis," Global Finance Journal, Elsevier, vol. 51(C).
    7. Oumniya Amrani & Amal Najab, 2022. "The Impact of Multi-Layer Corporate Governance on Banks’ Performance under the GFC and the COVID-19: A Cross-Country Panel Analysis Approach," JRFM, MDPI, vol. 16(1), pages 1-25, December.
    8. Nomran, Naji Mansour & Haron, Razali, 2020. "A systematic literature review on Sharı’ah governance mechanism and firm performance in Islamic banking," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 27, pages 91-123.

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