Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia

Islamic banks (IBs) must stay Shari’ah compliant to enhance their customer loyalty and obtain a competitive edge. Given the performance of Shari’ah supervisory board (SSB) continues to be a matter of concern especially for IBs across countries that have different regulatory environment, this paper...

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Main Authors:	Nomran, Naji Mansour, Haron, Razali, Hassan, Rusni
Format:	Article
Language:	English English English
Published:	Emerald Publishing Limited 2018
Subjects:	HG1501 Banking HG3368 Islamic Banking and Finance
Online Access:	http://irep.iium.edu.my/56257/ http://irep.iium.edu.my/56257/ http://irep.iium.edu.my/56257/ http://irep.iium.edu.my/56257/1/56257_Shari%27ah%20supervisory%20board%20characteristics%20effects.pdf http://irep.iium.edu.my/56257/7/56257_Shari%27ah%20supervisory%20board%20characteristics_WOS.pdf http://irep.iium.edu.my/56257/8/56257_Shari%27ah%20supervisory%20board%20characteristics_SCOPUS.pdf

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spelling	iium-562572018-06-29T05:48:48Z http://irep.iium.edu.my/56257/ Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia Nomran, Naji Mansour Haron, Razali Hassan, Rusni HG1501 Banking HG3368 Islamic Banking and Finance Islamic banks (IBs) must stay Shari’ah compliant to enhance their customer loyalty and obtain a competitive edge. Given the performance of Shari’ah supervisory board (SSB) continues to be a matter of concern especially for IBs across countries that have different regulatory environment, this paper aims to examine the effects of SSB characteristics on IBs’ performance in Malaysia being a country that applies the most extreme intervention of regulatory agencies (pro-active model). Design/methodology/approach A sample of 15 Malaysian IBs is used to test the study hypotheses for the period from 2008 to 2015 using the Generalized Method of Moments (GMM) estimator. Findings The results reveal strong support for a significant association between SSB size, doctoral qualification, change in the SSB composition and performance. In addition, the study supports the view that SSB with cross-membership and reputation are very important in improving the performance of IBs. Research Limitations Firstly, the paper focused only on Malaysia which adopts a pro-active model, and therefore, extending the investigation to include countries that adopt the different models may provide a better view of the best Shari’ah governance (SG) practices for IBs. Secondly, there is a need for more empirical analysis regarding the optimal SSB size of IBs. Practical Implications This paper provides empirical evidence for regulators and policy makers in Malaysia, to understand how to enhance the performance of IBs using Shari’ah governance. Furthermore, marketers of Malaysian IBs should focus on SG practices as an important element for attracting Muslim customers especially there is a lack in this aspect. Originality/value (mandatory) To date, it seems there is no empirical study that has examined to what extent the impact of SSB characteristics on IBs performance can be affected by whether the degree of agencies intervention extreme or slight. Malaysia has been chosen as the only country that adopts the most extreme model. Emerald Publishing Limited 2018 Article PeerReviewed application/pdf en http://irep.iium.edu.my/56257/1/56257_Shari%27ah%20supervisory%20board%20characteristics%20effects.pdf application/pdf en http://irep.iium.edu.my/56257/7/56257_Shari%27ah%20supervisory%20board%20characteristics_WOS.pdf application/pdf en http://irep.iium.edu.my/56257/8/56257_Shari%27ah%20supervisory%20board%20characteristics_SCOPUS.pdf Nomran, Naji Mansour and Haron, Razali and Hassan, Rusni (2018) Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia. International Journal of Bank Marketing, 36 (2). pp. 290-304. ISSN 0265-2323 https://www.emeraldinsight.com/doi/full/10.1108/IJBM-12-2016-0197 10.1108/IJBM-12-2016-0197
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English English
topic	HG1501 Banking HG3368 Islamic Banking and Finance
spellingShingle	HG1501 Banking HG3368 Islamic Banking and Finance Nomran, Naji Mansour Haron, Razali Hassan, Rusni Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia
description	Islamic banks (IBs) must stay Shari’ah compliant to enhance their customer loyalty and obtain a competitive edge. Given the performance of Shari’ah supervisory board (SSB) continues to be a matter of concern especially for IBs across countries that have different regulatory environment, this paper aims to examine the effects of SSB characteristics on IBs’ performance in Malaysia being a country that applies the most extreme intervention of regulatory agencies (pro-active model). Design/methodology/approach A sample of 15 Malaysian IBs is used to test the study hypotheses for the period from 2008 to 2015 using the Generalized Method of Moments (GMM) estimator. Findings The results reveal strong support for a significant association between SSB size, doctoral qualification, change in the SSB composition and performance. In addition, the study supports the view that SSB with cross-membership and reputation are very important in improving the performance of IBs. Research Limitations Firstly, the paper focused only on Malaysia which adopts a pro-active model, and therefore, extending the investigation to include countries that adopt the different models may provide a better view of the best Shari’ah governance (SG) practices for IBs. Secondly, there is a need for more empirical analysis regarding the optimal SSB size of IBs. Practical Implications This paper provides empirical evidence for regulators and policy makers in Malaysia, to understand how to enhance the performance of IBs using Shari’ah governance. Furthermore, marketers of Malaysian IBs should focus on SG practices as an important element for attracting Muslim customers especially there is a lack in this aspect. Originality/value (mandatory) To date, it seems there is no empirical study that has examined to what extent the impact of SSB characteristics on IBs performance can be affected by whether the degree of agencies intervention extreme or slight. Malaysia has been chosen as the only country that adopts the most extreme model.
format	Article
author	Nomran, Naji Mansour Haron, Razali Hassan, Rusni
author_facet	Nomran, Naji Mansour Haron, Razali Hassan, Rusni
author_sort	Nomran, Naji Mansour
title	Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia
title_short	Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia
title_full	Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia
title_fullStr	Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia
title_full_unstemmed	Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia
title_sort	shari’ah supervisory board characteristics effects on islamic banks’ performance: evidence from malaysia
publisher	Emerald Publishing Limited
publishDate	2018
url	http://irep.iium.edu.my/56257/ http://irep.iium.edu.my/56257/ http://irep.iium.edu.my/56257/ http://irep.iium.edu.my/56257/1/56257_Shari%27ah%20supervisory%20board%20characteristics%20effects.pdf http://irep.iium.edu.my/56257/7/56257_Shari%27ah%20supervisory%20board%20characteristics_WOS.pdf http://irep.iium.edu.my/56257/8/56257_Shari%27ah%20supervisory%20board%20characteristics_SCOPUS.pdf
first_indexed	2023-09-18T21:19:20Z
last_indexed	2023-09-18T21:19:20Z
_version_	1777411775988236288

Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia

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