Having survived the 2008 global economic crisis with its reputation largely unscathed, the Islamic banking (IB) governance model has attracted much attention of late and many conventional banks are now offering Shariah compliant products. Essentially, IB corporate governance model is distinct from that of conventional banks. Here, the Shariah Supervisory board (SSB) is one aspect of the corporate governance model distinctiveness in IB. The SSB of such institutions plays an invaluable role to protect the interests of various stakeholders by scrutinizing and ensuring that all IB products and practices are Shariah complaint. However, given the immense complexity of the tasks entrusted to the SSB, it becomes imperative that SSB members possess the necessary combinations of knowledge, skills, abilities and experiences to undertake such responsibilities in an effective manner. Despite its importance, empirical scrutiny of this issue is sparse. Based on the online disclosures and annual reports of 137 IBs around the world, this paper adopts a content analysis methodology to explore and evaluate the characteristics of SSB members. Findings suggest that SSB-related disclosures are generally poor and tend to vary from one country to another. Additionally, we analyze the extent of cross-board memberships. Interestingly, many SSB members sit on multiple boards. This not only point to a shortage in supply of appointable SSB members but also raise corporate governance questions related to independence, confidentiality and objectivity of these boards. Overall, the paper highlights major areas of corporate governance improvement and explains the IB corporate governance model using the legitimacy theory.
|Published - 7 Apr 2014
|26th International Business Research Conference - Imperial College London
Duration: 7 Apr 2014 → …
|26th International Business Research Conference
|7/04/14 → …