The role of the board of directors and Shariah supervisory board on the strategic market positioning of Islamic banks

Abstract

ABSTRACT The main aim of this article is to examine the role of board of directors and Shariah supervisory board on the strategic market positioning of Islamic banks in GCC Region. The generalized least squares (GLS) method is used to investigate the relationship between the study variables. The study sample included 235 yearly observations of 24 Islamic banks publicly traded in the financial markets in GCC Region for 10 years period from 2010 to 2019. The main results indicate that two characteristics of the board of directors specifically: size and independence, and three attributes of the Shariah supervisory board, namely, size, education level, and expertise, have significant effects on the strategic market positioning of Islamic banks in GCC Region. These results have implications for regulators and policy makers in relation to the board of directors and Shariah supervisory board in GCC Region in terms of number of board members as well as independent board members and in terms of Shariah board size, education level, and expertise. The article proposes recommendations for Islamic banks to improve their strategic market positioning and concludes with suggestions for future studies.