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The governance, risk-taking, and performance of Islamic banks
Stockholm University, Faculty of Social Sciences, Stockholm Business School.
Stockholm University, Faculty of Social Sciences, Stockholm Business School.
2017 (English)In: Journal of financial services research, ISSN 0920-8550, E-ISSN 1573-0735, Vol. 51, no 2, 195-219 p.Article in journal (Refereed) Published
Abstract [en]

We examine whether the difference in governance structures influences the risk taking and performance of Islamic banks compared to conventional banks. Using a sample of 52 Islamic banks and 104 conventional banks in 14 countries for the period from 2005 to 2013, we conclude that the governance structure in Islamic banks plays a crucial role in risk taking as well as financial performance that is distinct from conventional banks. Particularly, we show that the governance structure in Islamic banks allows them to take higher risks and achieve better performance because of product complexities and transaction mechanisms. However, Islamic banks maintain a higher capitalization compared to conventional banks. These results support the research on Islamic investment and risk taking. Our results add a new dimension to the governance research that could be a valuable source of knowledge for policy makers and regulators in the financial services sector.

Place, publisher, year, edition, pages
2017. Vol. 51, no 2, 195-219 p.
Keyword [en]
Corporate governance, Risk-taking, Firm performance, Islamic banks
National Category
Business Administration
Research subject
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-128363DOI: 10.1007/s10693-016-0245-2ISI: 000397599300003OAI: oai:DiVA.org:su-128363DiVA: diva2:914434
Funder
The Jan Wallander and Tom Hedelius Foundation
Available from: 2016-03-24 Created: 2016-03-24 Last updated: 2017-05-03Bibliographically approved

Open Access in DiVA

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