Insight into Corporate Governance in Islamic Finance: A Systematic Review of Literature

Authors

  • Quanita Rehman
  • Dr. Akhtiar Ali

Keywords:

Islamic banking, Islamic Financial Institutions, Corporate governance, Agency Theory, Stakeholder Theory, Shariah Supervisory Board

Abstract

The concept of corporate governance (CG) in Islamic banking (IB) has gained attention of researchers in the last two decades. This review paper aims to provide broad and comprehensive review of existing literature on CG in Islamic banks(IBs).

The research on CG in IBs has mainly been empirical conducted mostly in Gulf Cooperation Council (GCC) and South Eastern region with a few conceptual studies. A sound theoretical base for Islamic CG studies is still missing. The results suggesting role of Shariah Supervision are elusive. The impact of emerging economies and country legal systems as antecedents of CG have not been thoroughly covered in the literature. In the field of research this topic needs to be covered more rigorously and exhaustively.

CG in IBs is an emerging area of research and lack comprehensive review studies. Owing to the fact, this review paper aims to provide broad, comprehensive review of existing literature on corporate governance in IBs. which can be employed for further research about the subject matter.

References

Abd Razak, A. H. (2018) „Centralisation of corporate governance framework for Islamic financial institutions: Is it a worthy cause?‟, ISRA International Journal of Islamic Finance, 10(1), pp. 36–51. doi: 10.1108/IJIF-08-2017-0020.

Abdel-Baki, M. and Leone Sciabolazza, V. (2014) „A consensus-based corporate governance paradigm for Islamic banks‟, Qualitative Research in Financial Markets, 6(1), pp. 93–108. doi: 10.1108/QRFM-01-2013-0002.

Abdullah, W. A. W., Percy, M. and Stewart, J. (2015) „Determinants of voluntary corporate governance disclosure: Evidence from Islamic banks in the Southeast Asian and the Gulf Cooperation Council regions‟, Journal of Contemporary Accounting and Economics. Elsevier Ltd, 11(3), pp. 262–279. doi: 10.1016/j.jcae.2015.10.001.

Abedifar, P. et al. (no date) „ISLAMIC BANKING AND FINANCE : RECENT EMPIRICAL LITERATURE AND DIRECTIONS FOR‟, 29(4), pp. 637–670. doi: 10.1111/joes.12113.

Abu-Tapanjeh, A. M. (2009) „Corporate governance from the Islamic perspective: A

comparative analysis with OECD principles‟, Critical Perspectives on Accounting, 20(5), pp. 556–567. doi: 10.1016/j.cpa.2007.12.004.

Ajili, H. and Bouri, A. (2018) „Corporate governance quality of Islamic banks: measurement and effect on financial performance‟, International Journal of Islamic and Middle Eastern Finance and Management, 11(3), pp. 470–487. doi: 10.1108/IMEFM-05-2017-0131.

Alnasser, S. A. S. and Muhammed, J. (2012) „Introduction to corporate governance from Islamic perspective‟, Humanomics, 28(3), pp. 220–231. doi: 10.1108/08288661211258110. Amalina Wan Abdullah, W., Percy, M. and Stewart, J. (2013) „Shari‟ah disclosures in Malaysian and Indonesian Islamic banks:The Shari‟ah governance system‟, Journal of Islamic Accounting and Business Research, 4(2), pp. 100–131. doi: 10.1108/JIABR-10-2012- 0063.

Belal, A. R., Abdelsalam, O. and Nizamee, S. S. (2015) „Ethical Reporting in Islami Bank Bangladesh Limited (1983–2010)‟, Journal of Business Ethics, 129(4), pp. 769–784. doi: 10.1007/s10551-014-2133-8.

Bhatti, M. and Bhatti, I. (2009) „Development in legal Issues of Corporate Governance in Islamic Finance‟, Journal of Economic and Administrative Sciences, 25(1), pp. 67–91. doi: 10.1108/10264116200900004.

Bukair, A. A. and Abdul Rahman, A. (2015) „Bank performance and board of directors

attributes by Islamic banks‟, International Journal of Islamic and Middle Eastern Finance and Management, 8(3), pp. 291–309. doi: 10.1108/IMEFM-10-2013-0111.

Bukhari, K. S., Awan, H. M. and Ahmed, F. (2013) „An evaluation of corporate governance practices of Islamic banks versus Islamic bank windows of conventional banks: A case of Pakistan‟, Management Research Review, 36(4), pp. 400–416. doi: 10.1108/01409171311315003.

Choudhury, M. A. and Hoque, M. Z. (2006) „Corporate governance in Islamic perspective‟,

Corporate Governance, 6(2), pp. 116–128. doi: 10.1108/14720700610655132.

Darmadi, S. (2013) „Corporate governance disclosure in the annual report: An exploratory study on Indonesian Islamic banks‟, Humanomics, 29(1), pp. 4–23. doi: 10.1108/08288661311299295.

Elamer, A. A., Ntim, C. G., Abdou, H. A. and Pyke, C. (2019) „Sharia supervisory boards, governance structures and operational risk disclosures: Evidence from Islamic banks in MENA countries‟, Global Finance Journal. Elsevier Inc, p. 100488. doi: 10.1016/j.gfj.2019.100488.

Elamer, A. A., Ntim, C. G., Abdou, H. A., Zalata, A. M., et al. (2019) „The impact of multi- layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa‟, Accounting Forum. Taylor & Francis, 43(2), pp. 246–281. doi: 10.1080/01559982.2019.1576577.

Ezzine, H. (2018) „Corporate governance and social norms during financial crisis: evidence from France and Saudi Arabia‟, Journal of Management and Governance. Springer US, 22(3), pp. 707–748. doi: 10.1007/s10997-017-9400-x.

Fama, E. F. and Jensen, M. C. (2008) „Separation of ownership and control‟, The Value Creating Board: Corporate Governance and Organizational Behaviour, pp. 90–111. doi: 10.4324/9780203888711.

Farag, H., Mallin, C. and Ow-Yong, K. (2018) „Corporate governance in Islamic banks: New insights for dual board structure and agency relationships‟, Journal of International Financial Markets, Institutions and Money, 54, pp. 59–77. doi: 10.1016/j.intfin.2017.08.002.

Ghayad, R. (2008) „Corporate governance and the global performance of Islamic banks‟,

Humanomics, 24(3), pp. 207–216. doi: 10.1108/08288660810899368.

Ghosh, S. (2018) „Governance reforms and performance of MENA banks: Are disclosures effective?‟, Global Finance Journal, 36(January), pp. 78–95. doi: 10.1016/j.gfj.2018.01.002. Ginena, K. (2014) „Sharī„ah risk and corporate governance of Islamic banks‟, Corporate Governance (Bingley), 14(1), pp. 86–103. doi: 10.1108/CG-03-2013-0038.

Grais, W. and Pellegrini, M. (2006) „Corporate Governance in Institutions Offering Islamic Financial Services Issues and Options‟, World Bank Policy Research Working Paper, October(December 2006), pp. 1–46. doi: http://dx.doi.org/10.1596/1813-9450-4052.

Grassa, R. (2016) Corporate governance and credit rating in Islamic banks: Does Shariah governance matters?, Journal of Management and Governance. Springer US. doi: 10.1007/s10997-015-9322-4.

Grassa, R. (2018) „Deposits structure, ownership concentration and corporate governance disclosure in GCC Islamic banks: Empirical evidence‟, Journal of Islamic Accounting and

Business Research, 9(4), pp. 587–606. doi: 10.1108/JIABR-10-2014-0034.

Hamza, H. (2013) „Sharia governance in Islamic banks: effectiveness and supervision

model‟, International Journal of Islamic and Middle Eastern Finance and Management, 6(3),

pp. 226–237. doi: 10.1108/IMEFM-02-2013-0021.

Haniffa, R. and Hudaib, M. (2007) „Exploring the ethical identity of Islamic Banks via communication in annual reports‟, Journal of Business Ethics, 76(1), pp. 97–116. doi: 10.1007/s10551-006-9272-5.

Haridan, N. M., Hassan, A. F. S. and Karbhari, Y. (2018) „Governance, religious assurance and Islamic banks: Do Shariah boards effectively serve?‟, Journal of Management and Governance. Springer US, 22(4), pp. 1015–1043. doi: 10.1007/s10997-018-9418-8.

Hasan, Z. (2002) „Conceptual Definition of Corporate Governance Defining Corporation‟,

Islam Zeitschrift Für Geschichte Und Kultur Des Islamischen Orients, pp. 1–19.

Hashim, F., Mahadi, N. D. and Amran, A. (2015) „Corporate Governance and Sustainability Practices in Islamic Financial Institutions: The Role of Country of Origin‟, Procedia Economics and Finance. Elsevier B.V., 31(15), pp. 36–43. doi: 10.1016/s2212- 5671(15)01129-6.

Hassan, M. K. and Aliyu, S. (2018) „A contemporary survey of islamic banking literature‟, Journal of Financial Stability. Elsevier B.V., 34, pp. 12–43. doi: 10.1016/j.jfs.2017.11.006. Kumar, P., Hoang, D. and Phan, B. (2017) „Paci fi c-Basin Finance Journal A survey of Islamic banking and fi nance literature : Issues , challenges and future directions‟, Pacific- Basin Finance Journal. Elsevier, (May), pp. 1–13. doi: 10.1016/j.pacfin.2017.06.006.

Majeed, M. T. and Zainab, A. (2018) „Sharia‟h practice at Islamic banks in Pakistan‟, Journal of Islamic Accounting and Business Research, 9(3), pp. 274–289. doi: 10.1108/JIABR-03- 2015-0011.

Mansour, N., Thamar, N. and Banking, I. (2016) „Shari‟ah Supervisory Board Characteristics Effects On Islamic Banks‟ Performance : Evidence from Malaysia‟, International Journal of Bank Marketing.

Mollah, S. et al. (2017) „The governance, risk-taking, and performance of Islamic banks‟, Journal of Financial Services Research. Journal of Financial Services Research, 51(2), pp. 195–219. doi: 10.1007/s10693-016-0245-2.

Mollah, S. and Zaman, M. (2015) „Shari‟ah supervision, corporate governance and

performance: Conventional vs. Islamic banks‟, Journal of Banking and Finance. Elsevier B.V., 58, pp. 418–435. doi: 10.1016/j.jbankfin.2015.04.030.

Nawaz, T. (2019) „Exploring the Nexus Between Human Capital, Corporate Governance and Performance: Evidence from Islamic Banks‟, Journal of Business Ethics. Springer Netherlands, 157(2), pp. 567–587. doi: 10.1007/s10551-017-3694-0.

Neifar, S. and Jarboui, A. (2018) „Corporate governance and operational risk voluntary disclosure: Evidence from Islamic banks‟, Research in International Business and Finance. Elsevier B.V., 46, pp. 43–54. doi: 10.1016/j.ribaf.2017.09.006.

Quttainah, M. A. and Almutairi, A. R. (2017) „Corporate ethics: evidence from Islamic banks‟, Journal of Management and Governance. Springer US, 21(4), pp. 815–840. doi: 10.1007/s10997-016-9360-6.

Safieddine, A. (2009) „Islamic financial institutions and corporate governance: New insights

for agency theory‟, Corporate Governance: An International Review, 17(2), pp. 142–158. doi: 10.1111/j.1467-8683.2009.00729.x.

Safiullah, M. and Shamsuddin, A. (2019) „Risk-adjusted efficiency and corporate governance: Evidence from Islamic and conventional banks‟, Journal of Corporate Finance. Elsevier B.V, 55, pp. 105–140. doi: 10.1016/j.jcorpfin.2018.08.009.

Satkunasingam, E. and Shanmugam, B. (2004) „Disclosure and governance of Islamic banks: A case study of Malaysia‟, Journal of Banking Regulation, 6(1), pp. 69–81. doi: 10.1057/palgrave.jbr.2340182.

Sharmeen, K., Hasan, R. and Miah, M. D. (2019) „Underpinning the benefits of green banking: A comparative study between Islamic and conventional banks in Bangladesh‟, Thunderbird International Business Review, 61(5), pp. 735–744. doi: 10.1002/tie.22031. Ullah, H. (2014) „Shari‟ah compliance in Islamic banking: An empirical study on selected Islamic banks in Bangladesh‟, International Journal of Islamic and Middle Eastern Finance and Management, 7(2), pp. 182–199. doi: 10.1108/IMEFM-06-2012-0051.

Zafar, M. B. and Sulaiman, A. A. (2019) „Corporate social responsibility and Islamic banks: a systematic literature review‟, Management Review Quarterly. Springer International Publishing, 69(2), pp. 159–206. doi: 10.1007/s11301-018-0150-x.

Zaki, A., Sholihin, M. and Barokah, Z. (2014) „The association of Islamic bank ethical identity and financial performance: evidence from Asia‟, Asian Journal of Business Ethics, 3(2), pp. 97–110. doi: 10.1007/s13520-014-0034-7.

Ben Zeineb, G. and Mensi, S. (2018) „Corporate governance, risk and efficiency: evidence from GCC Islamic banks‟, Managerial Finance, 44(5), pp. 551–569. doi: 10.1108/MF-05- 2017-0186.

Downloads

Published

2022-03-30

How to Cite

Rehman, Q. ., & Ali, D. A. . (2022). Insight into Corporate Governance in Islamic Finance: A Systematic Review of Literature. The Journal of Contemporary Issues in Business and Government, 28(1), 125–149. Retrieved from https://cibgp.com/au/index.php/1323-6903/article/view/2288

Issue

Vol. 28 No. 1 (2022): The journal of contemporary issues in business and government

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

You are free to:

  1. Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
  2. Adapt — remix, transform, and build upon the material for any purpose, even commercially.
  3. The licensor cannot revoke these freedoms as long as you follow the license terms.

Under the following terms:

  1. Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
  2. No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.

Notices:

You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .

No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.