DOES CORPORATE GOVERNANCE MATTER FOR ASSET QUALITY OF ISLAMIC BANKS?

Ejaz Aslam (), Aziz Ur-Rehman () and Anam Iqbal ()
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Ejaz Aslam: Minhaj University Lahore
Aziz Ur-Rehman: IIUM Institute of Islamic Banking and Finance
Anam Iqbal: IIUM Institute of Islamic Banking and Finance

Bulletin of Monetary Economics and Banking, 2021, vol. 24, issue 2, 221-236

Abstract: This study investigates the impact of corporate governance on asset quality of Islamic banks by employing data on 129 Islamic banks from 29 countries spanning the period from 2008 to 2017. The study shows that asset quality of Islamic banks is positively and significantly sensitive to an increase in board independence, Shariah board, and audit committee effectiveness. The study finds that female participation in management as CEOs seems to detract from good performance and that more board meetings can be harnessed to improve banks’ asset quality. These empirical findings have practical policy implications regarding asset quality management and board construction within the Islamic banking sector.

Keywords: Corporate governance; 2SYS-GMM; Loan to assets; Loan to deposit; Non-performing loans; OIC countries (search for similar items in EconPapers)
JEL-codes: G18 G21 G34 H81 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:24:y:2021:i:2d:p:221-236

DOI: 10.21098/bemp.v24i2.1344

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