Abstract
The study investigates the impact of essential components
of Shar¯ı‘ah governance (SG), i.e., board of directors, executive
management, Shar¯ı‘ah Supervisory Board, Resident Shar¯ı‘ah Board
Members and Shar¯ı‘ah Audit (independent variables) towards
enhancement of SG (dependent variable) of Islamic banks in Pakistan.
The study is based on primary data and Multinomial logistic
regression analysis is used by categorizing the level of SG into three,
i.e., low, medium and high level. The study concludes that all the
independent variables are presenting a strong association with high
level of performance of SG relative to medium level (referent group)
except "Shar¯ı‘ah review and audit’ which is showing negative sign.
The negative sign depicts that the high level of performance of SG
is likely to be deteriorated by 1.48 times as the level of "Shar¯ı‘ah
review and audit" improves. This result is very intuitive since it has
been often observed that too much audit review and control hurts
and can lead to lower performance in the short run. The overall
results find that SG can be strengthened by enhancing efficiency of
the independent variables.
Muhammad Asghar Shahzad, Atiquzzafar Khan , Muhammad Tahir Mansoori , Asim Ehsan. (2020) Shar¯ı‘ah Governance in Islamic Banking Institutions in Pakistan: An Empirical Investigation, Journal of Islamic Business and Management, Volume 10, Issue 1.
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