scholarly journals Board Size, Chief Risk Officer and Risk-taking in Islamic Banks: Role of Shariah Supervisory Board

2019 ◽  
Vol 57 ◽  
Keyword(s):  
Risk Taking ◽  
Supervisory Board ◽  
Islamic Banks ◽  
Board Size

The Role of Shariah Supervisory Board in Legitimizing the Existence of Sudanese Islamic Banks through Social Responsibility Reporting

2021 ◽  
Vol 12 (3) ◽  
pp. 432-440
Author(s):  
Azam Abdelhakeem Khalid Et.al
Keyword(s):  
Social Responsibility ◽  
Information Disclosure ◽  
Cultural Context ◽  
Supervisory Board ◽  
Theoretical Implication ◽  
Annual Reports ◽  
Islamic Banks ◽  
Legitimacy Theory ◽  
Board Size

Purpose -This study empirically investigates the function of Shariah Supervisory Board (SSB) in legitimizing the social and ethical existence of Sudanese banks through the dissemination of data onIslamic social in annual reports. Design/methodology/approach -The paper examines a panel dataset covering the period 2006 – 2015 through the use of disclosure index and content analysis from 150annual reports of Sudanese banks. The role of SSB is expressed from the aspects of Corporate Governance mechanisms (i.e. board size, independency, doctoral qualification, cross- directorship, and the overall effect of SSB mechanisms).The current study employs the multiple regression models by using STATA-13 statistical toolin answering the research questions. Findings -The empirical results indicate that the board size, doctoral qualification, and cross-directorship of the members were positively correlatedwith the disclosure degree of Islamic Corporate Social Responsibility (ICSR) in the annual reports of Sudanese Islamic banks, which is in favour of legitimacy theory. Meanwhile, results indicate that, in contrary to legitimacytheory’s assumptions,the independence of SSB members is found to negatively correlate with the ICSR level of disclosure of the sampled Sudanese banks’ annual reports. Furthermore, the overall effects of SSB mechanisms are found to positivelyimpact the ICSR disclosure level. The study’sfindings add new empirical evidence to support the view that social information disclosure by companies is influenced by country- cultural context within which the company operates. Theoretical implication - In theory, this paper offers an analysis on CSR in Sudan from Islamic point of view. This paper is vital in view that social responsibility is highly regarded by Islam. Therefore, social responsibility must be adopted by all Islamic organizations, particularly the Islamic banks. Originality/value – From the researchers’ perspective, this study is the pioneer thatinvestigates the role of SSB on Sudanese Islamic banks through social responsibility reporting using legitimacy theory.

Sharia Compliant in Private Zakat Institutions of Riau

2020 ◽  
pp. 429-442
Author(s):  
Devi Megawati
Keyword(s):  
Financial Institutions ◽  
Supervisory Board ◽  
The Body ◽  
Islamic Banks ◽  
Body Of Knowledge ◽  
Islamic Financial Institutions ◽  
Primary Reference

This study aims to understand the role of Sharia Supervisors in the private Zakat Institution (LAZ) as well as other aspects of sharia compliance, such as Zakat fatwa on the perspective of Zakat officers. According to Decree of the Minister of Religion Number 333 / 2015 that LAZ as register must have a sharia supervisor. Sharia compliance of an institution could rely on the role of the sharia supervisory board (SSB). Some literature discussing this topic is still dominated study on Islamic financial institutions (IFIs), especially in Islamic Banks. Therefore this article will contribute to the body of knowledge, especially in the zakat literature. Data were gathered from five presiding officers of private zakat institutions in one province in Indonesia which consists of three presiding officers from provincial LAZ representative and two presiding officers from LAZ district. The study found that Sharia compliance in LAZ had many weaknesses such as lack of sharia control by sharia supervisors, a member of the sharia supervisory board who does not follow the latest issues about Zakat or the absence of competency requirements to be a sharia supervisor at LAZ and also did not make Zakat fatwa issued by MUI as the primary reference by zakat officer. This information will be useful for stakeholders, including supervisory authorities and regulators.

Can Shariah board characteristics influence risk-taking behavior of Islamic banks?

2019 ◽  
Vol 12 (4) ◽  
pp. 469-488 ◽  
Author(s):  
Amal AlAbbad ◽  
M. Kabir Hassan ◽  
Irum Saba
Keyword(s):  
Risk Taking ◽  
Supervisory Board ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Asset Return ◽  
Board Characteristics ◽  
The Relationship ◽  
Risk Taking Behaviors ◽  
Practical Implications

Purpose The purpose of this paper is to study whether the characteristics of the Shariah Supervisory Board (SSB) can influence the risk-taking behaviors of Islamic banks. Design/methodology/approach The data on governance were collected from 70 Islamic banks’ annual reports across 18 countries for the period from 2000 to 2011 to investigate the relationship between SSB’s characteristics including size, busyness and foreign board and the Islamic banks’ risk activities. Findings The size of SSB and the proportion of busy board in SSB positively and significantly influence Islamic banks’ asset return and insolvency risks. Foreign members are more effective in monitoring banks’ Shariah compliance. Further analysis provides some evidence that most of the findings on the associations between the SSB structure and bank risk are derived from countries in the Gulf Cooperation Council where Shariah governance is ruled internally at the bank level. Practical implications There is a need for better Shariah board characteristics in place that complement with other governance mechanisms to well comprehend the main purpose of Islamic banks. Originality/value SSB board busyness and foreign characteristics appear to influence the risk-taking behaviors of Islamic banks.

The role of Shari'a Fatwa and supervisory board in the Islamic banks

2013 ◽  
Vol 5 (1) ◽  
pp. 72-79
Author(s):  
Ammar Aldhala'een ◽  
Abdul Majeed Mahmoud Al-Salaheen
Keyword(s):  
Supervisory Board ◽  
Islamic Banks

scholarly journals Characteristics of Shari’ah Governance and Incidence of Charity: A case of Pakistan

2020 ◽  
Vol 5 (2) ◽  
pp. 77-91
Author(s):  
Mohammad Ayaz ◽  
◽  
Noman Arshed ◽  
Ikram ul Haq ◽  
◽  
...  
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Quantitative Methods ◽  
Panel Data Analysis ◽  
Supervisory Board ◽  
Financial Statements ◽  
Islamic Banks ◽  
Supervisory Boards ◽  
Unbalanced Panel Data

Characteristics of Shari’ah Governance and Incidence of Charity: A case of Pakistan There are several studies which have evidenced the role of Shari’ah governance on the profitability of Islamic banks for different countries in different data setup. The main purpose of Shari’ah governance is derived from the concept of corporate governance to avoid any non-compliant transactions and book charity against any non- compliant income. There are two kinds of Shari’ah supervisory boards. First is the proactive type that follows the rule of ‘Hisba’ which restricts any non-compliant transaction before it happens. The second type is reactive which detects and reacts to the non-compliant transactions following the Islamic legal system when they happen. The first type would conclude to a reduction in the incidence of charity transactions. In contrast, the second type would conclude to increase in the incidence of charity transaction. The objective of this study is to explore whether the Shari’ah governance of Islamic banks of Pakistan is jointly proactive or reactive. This study is deductive and uses quantitative methods. This study builds an unbalanced panel data of full-fledged Islamic banks of Pakistan using the available data from financial statements. This study is one of its kinds to see the nature of Shari’ah governance based on empirical patterns using Panel FGLS model. The results show that board size, board expertise, and reputation are the reactive factors while the others are proactive factors. Keywords: Shari’ah Supervisory Board, Panel Data Analysis, Shari’ah Disclosure, Shari’ah Controls.

scholarly journals CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power

2021 ◽  
Vol 19 (4) ◽  
pp. 530-543
Author(s):  
Zulfikar Zulfikar ◽  
Nursiam Nursiam ◽  
Mujiyati Mujiyati ◽  
Rosida Nur Syamsiyati
Keyword(s):  
Chief Executive Officers ◽  
Negative Relationship ◽  
Supervisory Board ◽  
Chief Executive ◽  
Moderating Effect ◽  
Islamic Banks ◽  
Ceo Power ◽  
Executive Officers ◽  
Detrimental Impact

The purpose of the study is to thoroughly outline how the hubris behavior of chief executive officers (CEO) is detrimental to Islamic banks’ (IBs) performance. Specifically, this study attempts to examine the role of the Sharia supervisory board (SSB), board vigilance, and CEO power in the relationship between CEO hubris behavior and decreased IBs’ performance. This study observes IBs’ performance during the period from 2014 to 2020 and develops eight models to test their determinants. Empirical testing of all models shows that CEO hubris has a detrimental impact on IBs’ performance. The moderating impact test shows the following results: firstly, the presence of SSB, which is represented by the reputation of its members, reduces the detrimental impact of hubris behavior by CEOs on IBs’ performance, while that impact, which is represented by member expertise, does not have a moderating effect. Second, the size and independence of the BOC both weaken the negative relationship between CEO hubris and IBs’ performance. Third, CEO power as represented by tenure and ownership has no moderating effect.

scholarly journals The Role of Islamic Corporate Governance and Risk Toward Islamic Banking Performance: Evidence from Indonesia

2021 ◽  
Vol 22 (3) ◽  
pp. Layouting
Author(s):  
Emile Satia Darma ◽  
Akhsyim Afandi
Keyword(s):  
Corporate Governance ◽  
Supervisory Board ◽  
Islamic Banks ◽  
Governance Mechanisms ◽  
Business Units ◽  
Corporate Governance Mechanisms ◽  
Negative Effect ◽  
Conventional Banks ◽  
Positive Effect

Research aims: This study aims to analyze the role of Islamic corporate governance mechanisms on the performance of Islamic banks. Besides, it also analyzes the effect of risk profiles, especially those that are directly related to bank financing, on the performance of Islamic Banks.Design/Methodology/Approach: Sharia banks that become the objects are Sharia Commercial Banks (SCB) and Sharia Business Units of Conventional Banks (SBU). This study uses data from 20 sharia banks (11 SCB and 9 SBU). The analytical tool used in this study is panel data regression.Research findings: The results show that the meeting frequency of the Board of Commissioners, Sharia Supervisory Board (SSB), Financing to Deposits Ratio (FDR), and bank size have a significant positive effect on the performance of Islamic banks. Non-Performing Financing (NPF) has a significant negative effect on the performance of Islamic banks.Theoretical contribution/Originality: This study utilized Stakeholders theory, Maqoshid Sharia concept, and corporate governance to investigate the role of Islamic corporate governance mechanisms and risk management on sharia Banks performance.Practitioner/Policy implication: The implication of this study is that SSB activities had a direct and robust influence on Islamic Banks, which have relatively larger assets. Hence, the task of the Sharia Supervisory Board should not be limited to only monitoring the conformity of transactions with sharia but also providing input so that banks can increase their profits in line with sharia.Research limitation/Implication: The limitation in this study is the number of corporate governance variables that was limited.

scholarly journals Examining the role of sharia supervisory board attributes in reducing financial statement fraud by Islamic banks

2020 ◽  
Vol 15 (3) ◽  
pp. 106-116
Author(s):  
Indah Anisykurlillah ◽  
Prabowo Yudo Jayanto ◽  
Hasan Mukhibad ◽  
Umi Widyastuti
Keyword(s):  
Islamic Law ◽  
Control Mechanism ◽  
Supervisory Board ◽  
Ordinary Least Squares ◽  
Negative Influence ◽  
Financial Statement ◽  
Islamic Banks ◽  
Financial Statement Fraud ◽  
Research Findings

Sharia Supervisory Board (SSB) plays an important role in implementing Islamic law in Islamic banks, including fraud prevention. This ungodly act, also known as haram, is highly forbidden in Islam, as evidenced in the holy book of Al Qur’an. Therefore, this study was conducted to provide evidence on the role of SSB attributes (number of members, expertise, cross-membership, educational level, attendance of meeting, tenure) in preventing fraud. This study used 11 Islamic banks in Indonesia as research samples that were observed during 2014–2018. Data were analyzed using the ordinary least squares (OLS) method. The research findings from this study showed that the number of members, cross-membership, education level, attendance of meetings, and SSB tenure were not proven to reduce fraud. SSB’s expertise in accounting/finance had a negative influence on financial statement fraud. The implication of the study is that SSB’s expertise helps banks to effectively carry out their duties, namely detecting financial statement fraud. SSB acts as an independent control mechanism that states that all bank activities are in line with Islamic law and also avoid financial statement fraud.

scholarly journals KEPATUHAN BANK SYARIAH TERHADAP FATWA DEWAN SYARIAH NASIONAL PASCA TRANSFORMASI KE DALAM HUKUM POSITIF

INFERENSI ◽  
2016 ◽  
Vol 10 (2) ◽  
pp. 517
Author(s):  
Agus Waluyo
Keyword(s):  
Supervisory Board ◽  
Field Research ◽  
Qualitative Approach ◽  
Compliance Monitoring ◽  
Islamic Banks ◽  
Legal Basis ◽  
National Board ◽  
Islamic Bank ◽  
Positive Law

The purpose of this research is to analize the Islamic Bank Commitment to implementation of fatwa Sharia National Board that has been transformed into positive law. The design of this study is qualitative approach. This field research using qualitative approach with data from interviews with the banks. The result shows that the fatwa related to Islamic banks that has been transformed into positive law can be used as a legal basis to be obeyed. The results showed that the Islamic Bank commitment to implementation of fatwa Sharia National Board has not been effective and efficient. The functions of sharia by the director of compliance to all employees of Islamic bank normatively has been implemented in accordance with the principles of compliance, the compliance culture, management risk, and the values. The role of Sharia Supervisory Board in sharia compliance monitoring system has been implemented but not optimal.

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