Leveraging Banking Financial Performance through Shari’ah Board’s Characteristics: Empirical Investigation

Mehwish Rafiq, Muhammad Fahad, Aisha Riaz and Muhammad Waqas Nazir
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Mehwish Rafiq: MS Scholar, Department of Business Administration, Institute of Southern Punjab, Multan, Pakistan
Muhammad Fahad: MS Finance Scholar, Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistan
Aisha Riaz: Lecturer, Department of Management Sciences, University of Okara, Okara, Pakistan
Muhammad Waqas Nazir: PhD Scholar, School of Economics and Management, Xidian University Shaanxi, Xi'an China

Bulletin of Business and Economics (BBE), 2024, vol. 13, issue 3, 36-41

Abstract: This study examines the impact of board characteristics on the financial outcomes of Shari'ah-compliant banks in Pakistan, with a particular focus on supervisory attributes such as board size, frequency of meetings, and independence in decision-making. The empirical analysis utilizes data from all Islamic banks of Pakistan over the period from 2021 to 2023, a timeframe chosen to evaluate financial performance in the context of post-pandemic economic challenges. Employing panel data analysis through multiple regression models, the study reveals that bank size does not have a significant effect on the financial outcomes. In contrast, the board size plays a crucial role in influencing financial success. Specifically, boards that are composed of independent members that meet regularly for strategic evaluations tend to achieve better financial performance. These results emphasize the importance of enhancing Shari'ah-compliant governance structures, particularly in the context of economic recovery. The implications of these findings suggest that to improve the decision-making process, Islamic banks should focus on quality and independence in board composition and prioritize frequent strategic assessments to improve financial outcomes.

Keywords: Financial Performance; Shari'ah Supervisory Board; ROA; Board Independence; Meeting Frequency (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:13:y:2024:i:3:p:36-41

DOI: 10.61506/

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