Standalone risk management committee, risk governance diversity and Islamic bank risk-taking

Umar Habibu Umar (), Muhamad Abduh () and Mohd Hairul Azrin Besar ()
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Umar Habibu Umar: Universiti Brunei Darussalam
Muhamad Abduh: Universiti Brunei Darussalam
Mohd Hairul Azrin Besar: Universiti Brunei Darussalam

Risk Management, 2023, vol. 25, issue 3, No 3, 23 pages

Abstract: Abstract Following the global financial crisis of 2008, new policies, rules and regulations were issued to improve corporate governance (CG) practices, particularly risk management practices, with a view to reducing excessive risk-taking. Hence, this study examined the effects of a standalone risk management committee and risk governance diversity on the risk-taking of Islamic banks. We utilized a set of 389 firm-year observations hand collected from the annual reports of 43 full-fledged Islamic banks drawn from fifteen (15) countries between 2010 and 2020. The findings indicate that the presence of a standalone risk management committee and the proportion of doctor of philosophy (PhD) holders on the risk management committee have a significant negative association with the risk-taking of Islamic banks. In contrast, the proportion of female directors in the risk management committee has a significant positive association with the risk-taking of Islamic banks. We find an insignificant positive association between the proportion of foreign directors in the risk management committee and the risk-taking of Islamic banks.

Keywords: Risk management committee; Risk-taking; Standalone risk committee; Risk governance diversity; Islamic banks (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41283-023-00123-3

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