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.
Publication Date
2022-05-01
Publication Title
Journal of International Financial Markets, Institutions and Money
Volume
78
ISSN
1042-4431
Recommended Citation
Nawaz, T. (2022) 'A Canary in a Coalmine! Religious agency and its impact on the performance of Islamic banks', Journal of International Financial Markets, Institutions and Money, 78. Available at: 10.1016/j.intfin.2022.101559
