Title: Is corporate governance different for Islamic banks? A comparative analysis between the Gulf Cooperation Council and Southeast Asian countries

Authors: Rihab Grassa; Hamadi Matoussi

Addresses: Higher Institute of Accountancy and Entrepreneurial Administration (ISCAE), Manouba University, 2010, Tunisia ' Higher Institute of Accountancy and Entrepreneurial Administration (ISCAE), Manouba University, 2010, Tunisia

Abstract: Islamic banks are particular financial institutions which generate distinct corporate governance challenges. This study compares the corporate governance attributes between Islamic and conventional banks in the Gulf Cooperation Council (GCC) and in Southeast Asian countries. Moreover, this paper studies the impact of relevant corporate governance variables on the Islamic banks' performance. The sample included 77 large Islamic banks and 85 conventional banks observed over the period 2000-2009. Our findings revealed that there were several divergences between the corporate governance characteristics of Islamic banks and those of conventional banks. These differences originated mainly from the ethical aspects dominating the activities of Islamic banks and the regulatory environment in which they operate. Moreover, we found that board fee, CEO duality and CEO age had a significantly positive effect on the Islamic banks' performance. However, the Shariah board characteristics seemed to be a value creator for Islamic banks.

Keywords: corporate governance; Islamic banks; GCC countries; Southeast Asia; bank performance; Islamic finance; Gulf Cooperation Council; ethical aspects; ethics; board fee; CEO duality; CEO age; Shariah board; value creation.

DOI: 10.1504/IJBGE.2014.062769

International Journal of Business Governance and Ethics, 2014 Vol.9 No.1, pp.27 - 51

Received: 23 May 2013
Accepted: 19 Feb 2014
Published online: 31 Mar 2015 *

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