Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions
Abstract Purpose – This study aims to empirically examine whether there is any optimal Shari’ah supervisory board’s (SSB) size that maximizes performance of Islamic banks (IBs). Apparently, IBs adopt different SSB size based on their different regulations across jurisdictions, and then it is stil...
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Emerald Publishing Limited
2020
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| Online Access: | http://irep.iium.edu.my/78011/ http://irep.iium.edu.my/78011/ http://irep.iium.edu.my/78011/1/78011%20-%20Shari%E2%80%99ah%20supervisory%20board%E2%80%99s%20size%20impact%20on%20performance%20in%20the%20Islamic%20banking%20industry.pdf |
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iium-780112020-01-10T02:09:29Z http://irep.iium.edu.my/78011/ Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions Haron, Razali Nomran, Naji HG3368 Islamic Banking and Finance Abstract Purpose – This study aims to empirically examine whether there is any optimal Shari’ah supervisory board’s (SSB) size that maximizes performance of Islamic banks (IBs). Apparently, IBs adopt different SSB size based on their different regulations across jurisdictions, and then it is still questionable whether there is any optimal SSB size that can fit all and be recommended to IBs. Design/methodology/approach – The paper investigates the impact of different SSB size on IBs performance using a sample of 113 banks over 23 countries for the period 2007-2015 based on the generalized method of moments estimator. Findings – The empirical evidence documented in this study strongly highlights the importance of small SSB size in enhancing the performance of IBs as compared to the large board size. The findings confirm that the SSB size of IBs should neither be lesser than three nor greater than six. More specifically, it is found that the optimal SSB size seems to be five. Research limitations/implications – First, the study does not investigate whether the findings are constant during crisis and non-crisis periods. Second, the optimal SSB size in IBs should be confirmed from the risk-taking perspective besides performance. Practical implications – For both the IBs and the regulators, they should give due importance to small SSB size as an important element for improving the IBs performance. It is strongly recommended for the IBs to have a SSB size between three and six, and five is the most recommended. The Accounting and Auditing Organization for Islamic Financial Institutions also should revise their existing standards that only suggest the minimumSSB size of three to include the maximum size of six and the optimal size of five. Originality/value – Despite the SSB size plays an important role in affecting the performance of IBs, it seems there are no empirical studies attempting to address whether there is any optimal SSB size that can enhance the IBs performance so far. Keywords Performance, Islamic banks, Shari’ah governance, Shari’ah supervisory board, Optimal board size Paper type Research paper Emerald Publishing Limited 2020-01-08 Article PeerReviewed application/pdf en http://irep.iium.edu.my/78011/1/78011%20-%20Shari%E2%80%99ah%20supervisory%20board%E2%80%99s%20size%20impact%20on%20performance%20in%20the%20Islamic%20banking%20industry.pdf Haron, Razali and Nomran, Naji (2020) Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions. Journal of Islamic Accounting and Business Research, 11 (1). pp. 110-129. ISSN 1759-0817 https://www.emerald.com/insight/content/doi/10.1108/JIABR-05-2017-0070/full/html |
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Digital Repository |
| institution_category |
Local University |
| institution |
International Islamic University Malaysia |
| building |
IIUM Repository |
| collection |
Online Access |
| language |
English |
| topic |
HG3368 Islamic Banking and Finance |
| spellingShingle |
HG3368 Islamic Banking and Finance Haron, Razali Nomran, Naji Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| description |
Abstract
Purpose – This study aims to empirically examine whether there is any optimal Shari’ah supervisory
board’s (SSB) size that maximizes performance of Islamic banks (IBs). Apparently, IBs adopt different SSB
size based on their different regulations across jurisdictions, and then it is still questionable whether there is
any optimal SSB size that can fit all and be recommended to IBs.
Design/methodology/approach – The paper investigates the impact of different SSB size on IBs
performance using a sample of 113 banks over 23 countries for the period 2007-2015 based on the generalized
method of moments estimator.
Findings – The empirical evidence documented in this study strongly highlights the importance of small
SSB size in enhancing the performance of IBs as compared to the large board size. The findings confirm that
the SSB size of IBs should neither be lesser than three nor greater than six. More specifically, it is found that
the optimal SSB size seems to be five.
Research limitations/implications – First, the study does not investigate whether the findings are
constant during crisis and non-crisis periods. Second, the optimal SSB size in IBs should be confirmed from
the risk-taking perspective besides performance.
Practical implications – For both the IBs and the regulators, they should give due importance to small
SSB size as an important element for improving the IBs performance. It is strongly recommended for the IBs
to have a SSB size between three and six, and five is the most recommended. The Accounting and Auditing
Organization for Islamic Financial Institutions also should revise their existing standards that only suggest
the minimumSSB size of three to include the maximum size of six and the optimal size of five.
Originality/value – Despite the SSB size plays an important role in affecting the performance of IBs, it
seems there are no empirical studies attempting to address whether there is any optimal SSB size that can
enhance the IBs performance so far.
Keywords Performance, Islamic banks, Shari’ah governance, Shari’ah supervisory board,
Optimal board size
Paper type Research paper |
| format |
Article |
| author |
Haron, Razali Nomran, Naji |
| author_facet |
Haron, Razali Nomran, Naji |
| author_sort |
Haron, Razali |
| title |
Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| title_short |
Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| title_full |
Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| title_fullStr |
Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| title_full_unstemmed |
Shari’ah supervisory board’s size impact on performance in the Islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| title_sort |
shari’ah supervisory board’s size impact on performance in the islamic banking industry empirical investigation of the optimal board size across jurisdictions |
| publisher |
Emerald Publishing Limited |
| publishDate |
2020 |
| url |
http://irep.iium.edu.my/78011/ http://irep.iium.edu.my/78011/ http://irep.iium.edu.my/78011/1/78011%20-%20Shari%E2%80%99ah%20supervisory%20board%E2%80%99s%20size%20impact%20on%20performance%20in%20the%20Islamic%20banking%20industry.pdf |
| first_indexed |
2023-09-18T21:49:58Z |
| last_indexed |
2023-09-18T21:49:58Z |
| _version_ |
1777413702881902592 |