Sharia Supervision Board, Board Independence, Risk Committee and Risk-taking of Islamic Banks in Malaysia
Zulkufly Ramly and
Nurusysyifa Datuk Haji Mohamad Nordin
Additional contact information
Zulkufly Ramly: Department of Finance, International Islamic University Malaysia, Gombak Campus, 53100 Kuala Lumpur, Malaysia,
Nurusysyifa Datuk Haji Mohamad Nordin: Department of Finance, International Islamic University Malaysia, Gombak Campus, 53100 Kuala Lumpur, Malaysia,
International Journal of Economics and Financial Issues, 2018, vol. 8, issue 4, 290-300
This paper investigates the moderating effects of Sharia Supervision Boards (SSBs) on the links between board independence and risk committee (RC) independence and Islamic banks’ (IBs) risk-taking in Malaysia from 2010 to 2015. The paper highlights four important findings: (1) SSB’s expertise in Sharia and banking-related areas lower credit risk, (2) higher board independence is likely to reduce credit risk when SSBs consist of Sharia advisors with expertise in Sharia and banking-related areas, (3) higher RC independence is likely to reduce credit risk when SSBs consist of Sharia advisors with expertise in Sharia and banking-related areas and (4) the reducing effect of RC on credit risk is conditional upon higher participation of female Sharia advisors in SSBs. This study suggests that the resources in terms of valuable experience that SSB advisors bring to IBs combined with the typical oversight mechanisms such as board independence and RC as suggested by corporate governance literature are beneficial to control risk-taking in the Malaysian IBs. Further, this paper demonstrates that integrating agency theory and resource dependence view in a corporate governance study produces a more meaningful result.
Keywords: Islamic Banks; risk-taking; SSB (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2018-04-37
Access Statistics for this article
International Journal of Economics and Financial Issues is currently edited by Ilhan Ozturk
More articles in International Journal of Economics and Financial Issues from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().