Risk management and corporate governance of Islamic banks: evidence from GCC countries
ISSN: 1472-0701
Article publication date: 17 May 2022
Issue publication date: 12 October 2022
Abstract
Purpose
The purpose of this study is to identify the effectiveness of risk management and corporate governance (CG) practices followed in Islamic banks (IBs) of Gulf Cooperation Council (GCC) countries. Hence, they are considered as critical performance indicators for financial institutions and IBs. Though the IBs are growing, there are still challenges associated with their operations because of Shariah noncompliance risks, governance, capital adequacy ratio and other risks.
Design/methodology/approach
This study uses a mixed-method approach, gathering qualitative data from senior risk managers of chosen IBs via semi-structured interviews and quantitative data from selected IBs financial reports using capital IQ resources. The information was gathered for a considerable time (2013–2019), and the CAMELS rating system was used to analyze it.
Findings
The results showed that GCC IBs manage their business risks well through effective CG except in certain areas like asset quality management and liquidity.
Practical implications
The result of this study can provide support to the banks’ top management, chief executives, regulators and government, in all practices related to risk assessment, management and mitigation.
Originality/value
This study contributes to the existing knowledge in risk management and CG practices. Furthermore, this study is a new attempt in knowing the risk management and CG practices followed in IBs in GCC countries using the mixed-method approach.
Keywords
Citation
Reyad, S., Chinnasamy, G. and Madbouly, A. (2022), "Risk management and corporate governance of Islamic banks: evidence from GCC countries", Corporate Governance, Vol. 22 No. 7, pp. 1425-1443. https://doi.org/10.1108/CG-08-2020-0360
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited