A COMPARATIVE ANALYSIS OF CORPORATE GOVERNANCE AND BANK PERFORMANCE: ISLAMIC BANKS VERSUS CONVENTIONAL BANKS

Year 2018, , 34 - 50, 30.03.2018

Talat Ulussever

https://doi.org/10.17261/Pressacademia.2018.815

Abstract

Purpose - This study examines the relationship between the
multi-layer corporate governance model of Islamic banking and bank performance.    

Methodology - The random-effects GLS method for the regression
analysis and two-step generalized methods of moments for the robustness check
of the findings were utilized.

Findings - The results show that boards are strong and the CEO’s are
powerful in Islamic banks. While the return variables of Islamic banks are
positively correlated with the financial disclosure index and board structure
variables, they are negatively correlated with the risk closure index and CEO
related variables. The corporate governance and financial disclosure indices
lessen the profitability of Islamic banks as they are negatively significant
with performance variables.

Conclusion - The governance mechanism provides a weak explanation
for the changes in shareholders’ value of Islamic banks, which shows that
conventional banks have better, more effective, governance system than Islamic
banks in this regard.  

Keywords

Corporate Governance, Islamic Banks, Conventional Banks, Bank Performance, Shari’ah Supervision

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