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Governance and Risk Management: Empirical Evidence from Malaysia and Egypt

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  • Rashidah Abdul Rahman

    (Professor of Accounting, Universiti Teknologi MARA, 40450 Shah Alam, Selangor,Malaysia)

  • Siti Balqis Noor

    (Universiti Teknologi MARA40450 Shah Alam, Selangor,Malaysia)

  • Tariq Ismail

    (College of Business Administration, Majmmah University, Majmaah, Saudi Arabia)

Abstract

The perceptions of Islamic banking professionals are surveyed through a questionnaire to explore whether the process of risk management mediates board involvement in risk management and risk management practices of Islamic banks in Malaysia and Egypt. The findings of this study identified that the Islamic banks in the selected countries are somewhat efficient in their risk management process. It was noticed that board involvement in risk management, process of risk management and risk management among Islamic banks in Malaysia are significantly higher than their counterparts in Egypt. Furthermore, high involvement of boards in risk management significantly increases the risk management process, and in turn, leads to significantly higher risk management practices in Islamic banks. Hence, boards should take formal responsibility for setting, managing and periodically assessing the risk management culture of the banks. It is expected that the outcomes of this study would help policy setters in the selected countries to develop a well-structured and harmonized risk management process that enhance risk management practices, with emphasis on the effective involvements of the board of directors and Shari’ah supervisory boards in risk management practices.

Suggested Citation

  • Rashidah Abdul Rahman & Siti Balqis Noor & Tariq Ismail, 2013. "Governance and Risk Management: Empirical Evidence from Malaysia and Egypt," International Journal of Finance & Banking Studies, Society for the Study of Business & Finance, vol. 2(3), pages 21-33, July.
  • Handle: RePEc:rbs:ijfbss:v:2:y:2013:i:3:p:21-33
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    References listed on IDEAS

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    1. Hameeda Abu Hussain, 2012. "Risk management practices of conventional and Islamic banks in Bahrain," Journal of Risk Finance, Emerald Group Publishing, vol. 13(3), pages 215-239, May.
    2. Abul Hassan, 2009. "Risk management practices of Islamic banks of Brunei Darussalam," Journal of Risk Finance, Emerald Group Publishing, vol. 10(1), pages 23-37, January.
    3. Tariq H. Ismail, 2012. "Internal auditors' perception about their role in risk management audit in Egyptian banking sector," International Journal of Economics and Accounting, Inderscience Enterprises Ltd, vol. 3(2), pages 196-220.
    4. Elgari, Mohamed Ali, 2003. "Credit Risk In Islamic Banking And Finance," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 10, pages 2-25.
    5. Hussein A. Hassan Al-Tamimi & Faris Mohammed Al-Mazrooei, 2007. "Banks' risk management: a comparison study of UAE national and foreign banks," Journal of Risk Finance, Emerald Group Publishing, vol. 8(4), pages 394-409, August.
    6. Mohamed Ali Trabelsi, 2011. "The impact of the financial crisis on the global economy: can the Islamic financial system help?," Journal of Risk Finance, Emerald Group Publishing, vol. 12(1), pages 15-25, January.
    7. Jemma Dridi & Maher Hasan, 2010. "The Effects of the Global Crisison Islamic and Conventional Banks; A Comparative Study," IMF Working Papers 10/201, International Monetary Fund.
    8. Patrick Imam & Kangni Kpodar, 2010. "Good for Growth?," Post-Print halshs-00673459, HAL.
    9. Edib Smolo & Abbas Mirakhor, 2010. "The global financial crisis and its implications for the Islamic financial industry," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 3(4), pages 372-385, November.
    10. Salina H. Kassim & M. Shabri Abd. Majid, 2010. "Impact of financial shocks on Islamic banks: Malaysian evidence during 1997 and 2007 financial crises," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 3(4), pages 291-305, November.
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    1. repec:pal:jbkreg:v:19:y:2018:i:3:d:10.1057_s41261-017-0046-z is not listed on IDEAS

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