Abstract
This study investigates the impact of characteristics and role of
Shar¯ı‘ah Supervisory Board (SSB) and corporate governance mechanisms
on efficiency in Islamic Banks (IBs). A sample of 30 banks is drawn from
those IBs that are listed on Asian stock markets. Corporate and SSB act
as guardians of rights of minority shareholders by constantly monitoring
controlling shareholders. The characteristics of both these boards affect
the procedures installed thus affecting efficiency of these financial
institutions. Multivariate panel data regression analysis is employed as
the estimation procedure. The results show that a few characteristics of
both the boards are positively related to efficiency. The study reports
an empirical evidence of positive association between size of the SSB,
audit committee independence and efficiency of banks listed in Asia. The
results of this study suggest that the users of financial statements should
consider characteristics of corporate as well as Shar¯ı‘ah boards for the
evaluation of respective Islamic banks. This study also notifies that in order
to improve efficiency, the regulators should set forth guidelines regarding
the size of SSB as well as the percentage of independent members on the
audit committee in Islamic banks where governance is shared between the
two boards, regulations are constantly being developed and installed with
somewhat limited knowledge and skill of board members regarding the
implementation of these regulations to improve efficiency
Muhammad Bilal Saeed, Syed Kashif Saeed. (2018) Characteristics of Shar¯ı‘ah Supervisory Board, Corporate Governance Mechanisms and Efficiency of Islamic Banks: Evidence from Listed Banks in Asia, Journal of Islamic Business and Management, Volume 8, Issue 1.
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