A canary in a Coalmine! religious agency and its impact on the performance of Islamic banks

Nader Virk, Tasawar Nawaz, Philip Molyneux

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We examine the impact of religious agency on the performance of GCC Islamic banks. Our results show that a high proportion of prominent religious scholars on Shariah supervisory boards (SSB) improves financial performance. However, when a prominent Shariah scholar chairs the SSB there are negative performance effects. With the high concentration of a few Shariah scholars, our findings have twofold implications: first, future research should develop approaches to test Shariah governance effectiveness in relation to the assigned mandate of SSBs; second, there is a need for revisiting Shariah compliance mechanisms to mitigate the embeddedness of Shariah scholars and their influence on Islamic bank performance.

Original languageEnglish
Article number101559
Number of pages11
JournalJournal of International Financial Markets, Institutions and Money
Volume78
Early online date26 Apr 2022
DOIs
Publication statusPublished - 1 May 2022
Externally publishedYes

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