Corporate governance, Sharia’ah governance and performance: A cross-country comparison in MENA region
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 3 June 2019
Issue publication date: 3 June 2019
Abstract
Purpose
The performance and effectiveness of governance principles continue to be a matter of concern (Mollah and Zaman, 2015). Focusing on differences between conventional and Islamic banks, this study aims to examine the relationship between governance and bank’s operational (return on assets [ROA]), financial (return on equity [ROE]) and market performance (Tobin’s q [TQ]).
Design/methodology/approach
This study examined 127 banks within the Mena countries for the 10 years 2007 through 2016, for a total of 1270 observations. The study’s independent variable is corporate governance principles; the dependent variables are ROA, ROE and TQ. Also, the study uses bank- and country-specific control variables to help measure the relationship between governance and bank performance.
Findings
The findings deduced from the empirical results demonstrate that Sharia’ah governance significantly influenced ROA and ROE. However, corporate governance significantly influenced TQ. Furthermore, the results indicated that there were differences between Sharia’ah governance and corporate governance with regard to operational, financial and market performance.
Originality/value
The study provides insights into the differences in the relationship between Sharia’ah governance, corporate governance and the improvement of performance, which might be used by both banks to re-adopt the governance practices in enhancing the operational, financial and market performance.
Keywords
Citation
Buallay, A. (2019), "Corporate governance, Sharia’ah governance and performance: A cross-country comparison in MENA region", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 12 No. 2, pp. 216-235. https://doi.org/10.1108/IMEFM-07-2017-0172
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited