DOES CORPORATE GOVERNANCE MATTER FOR ASSET QUALITY OF ISLAMIC BANKS?

  • Ejaz Aslam IIUM
  • Aziz Ur-Rehman IIUM Institute of Islamic Banking and Finance
  • Anam Iqbal IIUM Institute of Islamic Banking and Finance
Keywords: Corporate governance, 2SYS-GMM, Loan to assets, Loan to deposit, Non-performing loans, OIC countries

Abstract

This study investigates the impact of corporate governance on asset quality of Islamic banks by employing data on 129 Islamic banks from 29 countries spanning the period from 2008 to 2017. The study shows that asset quality of Islamic banks is positively and significantly sensitive to an increase in board independence, Shariah board, and audit committee effectiveness. The study finds that female participation in management as CEOs seems to detract from good performance and that more board meetings can be harnessed to improve banks’ asset quality. These empirical findings have practical policy implications regarding asset quality management and board construction within the Islamic banking sector.

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Published
2021-06-30
How to Cite
Aslam, E., Ur-Rehman, A., & Iqbal, A. (2021). DOES CORPORATE GOVERNANCE MATTER FOR ASSET QUALITY OF ISLAMIC BANKS?. Buletin Ekonomi Moneter Dan Perbankan, 24(2), 221 - 236. https://doi.org/10.21098/bemp.v24i2.1344
Section
Articles