scholarly journals Shariah Governance Characteristics and Risk-taking of Local and Foreign Islamic Banks in Malaysia: A Conceptual Model

2020 ◽  
Vol 5 (2) ◽  
Author(s):  
Salina Rasli ◽  
Aza Azlina Md Kassim
Keyword(s):  
Corporate Governance ◽  
Conceptual Model ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Banking System ◽  
Governance Structure ◽  
Islamic Banks ◽  
Prior Review ◽  
Shariah Governance ◽  
The Global Financial Crisis

Purpose: In Malaysia, since the global financial crisis in 2007 and 2008, the low level of stability, excessive risk-taking and weak governance structure in the dual banking system has become essential for deliberation. The purpose of this research is to develop a conceptual model on the effect of Shariah governance characteristics on risk-taking between local and foreign of Islamic banks in Malaysia. Design/Methodology/Approach: Based on prior review of indicators and findings, this research proposes a conceptual model of effective Shariah governance characteristics and its effect on risk-taking of Islamic banks. A self-develop of Shariah board index (SB-Index) based on SB size, education background, membership with IFSB and attendance in meeting. Insolvency risk, credit risk and liquidity risk are the proxy used for risk-taking measurement. The theory of stewardship and resource dependency theory are used as examples of the theories of corporate governance to support the conceptual framework suggested. Findings: The Islamic banks in Malaysia are assumed to have effective Shariah governance and there will be low impact on risk-taking. Implications/Originality/Value: The regulators of Islamic banks must prepare for the need to improve the current standards for corporate governance in Malaysia.

scholarly journals Shariah Governance Characteristics and Risk-Taking of Local and Foreign Islamic Banks in Malaysia: A Conceptual Model

2020 ◽  
Vol 6 (2) ◽  
pp. 441-451
Author(s):  
Salina Rasli ◽  
Aza Azlina Md Kassim ◽  
Abul Bashar Bhuiyan
Keyword(s):  
Corporate Governance ◽  
Conceptual Model ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Banking System ◽  
Governance Structure ◽  
Islamic Banks ◽  
Prior Review ◽  
Shariah Governance ◽  
The Global Financial Crisis

Purpose: In Malaysia, since the global financial crisis in 2007 and 2008, the low level of stability, excessive risk-taking and weak governance structure in the dual banking system has become essential for deliberation. The purpose of this research is to develop a conceptual model on the effect of Shariah governance characteristics on risk-taking between local and foreign of Islamic banks in Malaysia. Design/Methodology/Approach: Based on prior review of indicators and findings, this research proposes a conceptual model of effective Shariah governance characteristics and its effect on risk-taking of Islamic banks. A self-develop of Shariah board index (SB-Index) based on SB size, education background, membership with IFSB and attendance in meeting. Insolvency risk, credit risk and liquidity risk are the proxy used for risk-taking measurement. The theory of stewardship and resource dependency theory are used as examples of the theories of corporate governance to support the conceptual framework suggested. Findings: The Islamic banks in Malaysia are assumed to have effective Shariah governance and there will be low impact on risk-taking. Implications/Originality/Value: The regulators of Islamic banks must prepare for the need to improve the current standards for corporate governance in Malaysia.

Corporate Governance and Risk Aggressiveness of Islamic Banks Against the Recent Financial Crisis

2019 ◽  
Vol 37 (3) ◽  
pp. 171
Author(s):  
Talat Ulussever
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Banking System ◽  
Islamic Banks ◽  
Governance Mechanism ◽  
Motivating Factors ◽  
Recent Financial Crisis ◽  
The Global Financial Crisis

This study examines whether the multi-layer corporate governance mode of Islamic banking system can prevent Islamic banks from excessive risk taking and hence protect against its fallibility to the global financial crisis. Employing the random-effects GLS method with two-step GMM method for the robustness check and using the dataset of total 154 banks over the period of 2005–2011, the results show that the corporate governance and financial disclosure indices appear as the motivating factors for risk taking attitudes of Islamic banks. Thus, the governance mechanism of Islamic banks is effective in protecting them against their fallibility to the global financial crisis.

scholarly journals CEO power and bank risk in the UAE

2020 ◽  
Vol 15 (3) ◽  
pp. 117-128
Author(s):  
Haileslasie Tadele ◽  
Baliira Kalyebara
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Bank Risk ◽  
Islamic Banks ◽  
Ceo Power ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Conventional Banks ◽  
The Relationship

The lessons from the 2008 global financial crisis show that excessive risk taking and governance failures contribute to the failure of several banks. As a result, the relationship between corporate governance mechanisms and risk taking has been the subject of many studies. However, extant studies report inconclusive results. Therefore, this study aims to investigate the relationship between CEO power and bank risk in the UAE using data over the period of 2015–2018 and a sample of 19 UAE banks. The study uses a Pearson pairwise correlation to analyze the relationship between CEO power and bank risk. In addition, a two-tailed t-test is used to examine the differences between conventional and Islamic banks in terms of CEO power and risk-taking. The results of the study show that CEO power measured using CEO duality and CEO tenure reduces risk. Furthermore, the paper indicates that larger boards and higher CEO ownership tend to increase risk. The study also reports that conventional banks have higher return variability, larger boards and powerful CEOs than Islamic banks. However, Islamic banks tend to have higher non-performing finances than conventional banks. The study provides important insights on the relationship between CEO power and bank risk and concurs with earlier studies. The findings can be of interest to policy makers and can be used as input data for the development of corporate governance mechanisms. Shareholders can also use the survey results as input when appointing a CEO for their banks.

The Impact of Shariah Governance and Corporate Governance on the Risk Management Practices: Evidence from Local and Foreign Islamic Banks in Malaysia

2018 ◽  
Vol 15 (2) ◽  
pp. 1-20
Author(s):  
Sabri Embi ◽  
Zurina Shafii
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Principal Component ◽  
T Test ◽  
The Body ◽  
Primary Data ◽  
Islamic Banks ◽  
Shariah Governance ◽  
The Impact

The purpose of this study is to examine the impact of Shariah governance and corporate governance (CG) on the risk management practices (RMPs) of local Islamic banks and foreign Islamic banks operating in Malaysia. The Shariah governance comprises the Shariah review (SR) and Shariah audit (SA) variables. The study also evaluates the level of RMPs, CG, SR, and SA between these two type of banks. With the aid of SPSS version 20, the items for RMPs, CG, SR, and SA were subjected to principal component analysis (PCA). From the PCA, one component or factor was extracted each for the CG, SR, and RMPs while another two factors were extracted for the SA. Primary data was collected using a self-administered survey questionnaire. The questionnaire covers four aspects ; CG, SR, SA, and RMPs. The data received from the 300 usable questionnaires were subjected to correlation and regression analyses as well as an independent t-test. The result of correlation analysis shows that all the four variables have large positive correlations with each other indicating a strong and significant relationship between them. From the regression analysis undertaken, CG, SR, and SA together explained 52.3 percent of the RMPs and CG emerged as the most influential variable that impacts the RMPs. The independent t-test carried out shows that there were significant differences in the CG and SA between the local and foreign Islamic banks. However, there were no significant differences between the two types of the bank in relation to SR and RMPs. The study has contributed to the body of knowledge and is beneficial to academicians, industry players, regulators, and other stakeholders.

Does bank governance affect risk and efficiency? Evidence from Islamic banks in GCC countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samir Srairi ◽  
Khawla Bourkhis ◽  
Asma Houcine
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Risk Taking ◽  
Audit Committee ◽  
Governance Structure ◽  
Board Structure ◽  
Islamic Banks ◽  
Bank Efficiency ◽  
Content Type ◽  
Gcc Countries

Purpose The motivation of the study is to shed further light on the question of whether the governance structure of Islamic banks (IBs) has an impact on the efficiency and risk of Islamic banks operating in the Gulf Cooperation Council (GCC) after the global financial crisis and during the period 2010–2018. This study aims to examine the extent of governance structure on the efficiency and risk of IBs as the effect of the financial crisis has been less on IBs. In addition, the authors are interested in the GCC region as it represents the hub of Islamic finance. Design/methodology/approach In this study, the authors examine how the banking governance structure affects the risk-taking and performance of IBs in the GCC countries between 2010 and 2018. The authors construct a banking governance index (CGI) composed of sub-indices for the board structure, risk management, transparency and disclosure, audit committee, Sharia supervisory board and investment account holders. Unlike the majority of previous studies, bank performance is measured with technical efficiency scores using a data envelopment analysis and the authors use a comprehensive CGI. Findings The results show that IBs in GCC countries adhere to 54% of the attributes covered in the CGI. The authors also note a lack of disclosure regarding the investment account holders and the audit committee. As well, the results indicate that bank governance is positively associated with risk-taking and bank efficiency. Banking risk is influenced by the Sharia board and risk management while bank efficiency is affected by the characteristics of the board structure and investment account holders. Originality/value To the best of the authors’ knowledge, this is the first study that has developed a comprehensive governance index for IBs in GCC countries that includes a wide range of governance dimensions. The study contributes to the literature on governance in the banking sector by simultaneously examining its impact on the risk-taking and efficiency of IBs and recognizes the dynamic relation between these three variables for IB.

scholarly journals Unexpected corporate outcomes from hedge fund activism in Japan

2018 ◽  
Vol 18 (1) ◽  
pp. 31-52 ◽  
Author(s):  
John Buchanan ◽  
Dominic H Chai ◽  
Simon Deakin
Keyword(s):  
Corporate Governance ◽  
Global Financial Crisis ◽  
Hedge Fund ◽  
Management Effectiveness ◽  
Managerial Decisions ◽  
Country Level ◽  
The Usa ◽  
Market Perception ◽  
Hedge Fund Activism ◽  
The Global Financial Crisis

Abstract Hedge fund activism has been identified in the USA as a driver of enduring corporate governance change and market perception. We investigate this claim in an empirical study to see whether activism produced similar results in Japan in four representative areas: management effectiveness, managerial decisions, labour management and market perception. Experience from the USA would predict positive changes at Japanese target companies in these four areas. However, analysis of financial data shows that no enduring changes were apparent in the first three areas, and that market perception was consistently unfavourable. Our findings demonstrate that the same pressures need not produce the same results in different markets. Moreover, while the effects of the global financial crisis should not be ignored, we conclude that the country-level differences in corporate governance identified in the varieties of capitalism literature are robust, at least in the short term.

scholarly journals PANDEMIC CRISIS AND ITS EFFECTS ON BULGARIAN BANKING SYSTEM’S EFFICIENCY

2021 ◽  
Author(s):  
Gergana Mihaylova-Borisova ◽  
Keyword(s):  
Growth Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Debt Crisis ◽  
Parametric Method ◽  
Banking System ◽  
Data Envelopment ◽  
The Global Financial Crisis

The economies are once again facing the challenges of another crisis related to the spread of coronavirus in 2020. The banking sector, being one of the main intermediaries in the economies, is also affected by the spread of the new crisis, which is different compared to the previous crises such as the global financial crisis in 2008 and the European debt crisis in 2012-2013. Still, the banking sector in Bulgaria suffers from the pandemic crisis due to decelerated growth rate of loans, provided to households and non-financial enterprises, as well as declining profits related to the narrowing spread between interest rates on loans and deposits. The pandemic crisis, which later turned into an economic one, is having a negative impact on the efficiency of the banking system. To prove the negative impact of the pandemic crisis on the efficiency of banks, the non-parametric method for measuring the efficiency, the so-called Data envelopment analysis (DEA), is used.

scholarly journals Empty talk? University voices on the Global Financial Crisis

2010 ◽  
Vol 6 (4) ◽  
Author(s):  
Todd Bridgman
Keyword(s):  
Financial Crisis ◽  
News Media ◽  
Global Financial Crisis ◽  
Housing Prices ◽  
Banking System ◽  
Policy Makers ◽  
The Us ◽  
Complex Events ◽  
The Global Financial Crisis ◽  
Company Sector

The global financial crisis (GFC) which began in 2007 with a liquidity squeeze in the US banking system and which continues to play out today has affected us all, whether through the collapse of the finance company sector, rising unemployment, falling housing prices or the recession which followed the initial market crash. The speed and scope of the crisis surprised most experts – policy makers included. Specialists from a myriad of disciplines, from economics and finance to risk management, corporate governance and property, are trying to make sense of what happened, why it happened and what it means for us now and into the future. Members of the public rely on the news media to keep them informed of the crisis as it unfolds and they rely on experts to translate these complex events into a language which they can understand. The GFC is educating us all, and it is important that we all learn from it to avoid making the same mistakes again. 

scholarly journals Universal corporate governance standards: recommendations following the global financial crisis

2014 ◽  
Vol 11 (3) ◽  
pp. 438-446
Author(s):  
Ronald Henry Mynhardt
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
The Global Financial Crisis ◽  
A Company ◽  
The Way

Corporate governance can be defined as: the set of processes, customs, policies, laws and institutions affecting the way a company is directed, administered or controlled. Suggestions were investigated that the global financial crisis revealed severe shortcomings in corporate governance. Research was conducted to establish whether these suggestions are accurate. The study found that it appeared that corporate governance has failed and action needs to be taken. The study recommends that a world supervisory body on corporate governance be established. It also proposes that a summit be called to discuss and create such an authority. In addition, the formulation of a set of universal corporate governance standards for implementation by the members was suggested

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