Abstract

The impact of institutional corporate governance on the financial performance of Islamic banks, with a specific focus on Shari’ah Supervisory Boards and corporate boards. The findings of this study indicate that Islamic banks with Shari’ah Supervisory Boards outperform Islamic banks without such boards, as measured by return on assets (ROA), return on equity (ROE), asset growth (AG), and interest margins (IM). Further findings indicate that the financial performances of Islamic banks with Shari’ah Supervisory Boards and corporate boards are influenced by several board characteristics, including the size of the board and the education of the board members. Moreover, Shari’ah Supervisory Boards provide tighter monitoring and control, as well as more advising and counseling, as compared with Islamic banks without Shari’ah Supervisory Boards. Later findings indicate that Shari’ah Supervisory Boards’ affiliations with international Islamic financial institutions motivate the positive relationship between the Shari’ah Supervisory Boards and Islamic bank performance. Overall, this study provides strong evidence that Shari’ah Supervisory Boards benefit shareholders by complementing corporate boards and thus mitigating agency problems and agency costs

Highlights

  • This research focuses on the banking industry, given both the importance of banks for the global financial stability (especially in the context of the recovery actions in the aftermath of the pandemic crisis) and its specific national and international industry regulations

  • This research focuses on the banking industry, given both the importance of banks for the global financial stability and its specific national and international industry regulations

  • Our primary goal is to investigate the suitability of the existing European Single Electronic Format (ESEF) taxonomy to the needs of the Italian listed banks: to achieve this goal, we used the data of a preliminary field test started in 2019 by the Italian XBRL jurisdiction (XBRL Italy) together with 6 of the largest Italian banks

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Summary

Introduction

This research focuses on the banking industry, given both the importance of banks for the global financial stability (especially in the context of the recovery actions in the aftermath of the pandemic crisis) and its specific national and international industry regulations. Our primary goal is to investigate the suitability of the existing ESEF taxonomy to the needs of the Italian listed banks: to achieve this goal, we used the data of a preliminary field test started in 2019 by the Italian XBRL jurisdiction (XBRL Italy) together with 6 of the largest Italian banks. From the issuers‘ standpoint, who is going to decide and control the extended taxonomy?

Results
Conclusion

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