MULTIPLE DIRECTORSHIPS OF SHARI’AH COMMITTEES IN ISLAMIC BANKS: DO INTERNAL AUDIT AND FINANCIAL PERFORMANCE MATTER?
Abstract
The paper examines whether governance characteristics and bank-specific attributes associate with the presence of the Shari’ah Committee (SC) members who hold multiple directorships in Islamic Banks (IBs). The paper utilizes a Logit Model in a sample of IBs in Sudan. The findings show that IBs with internal audit departments, high performance, and large debts are more likely to have SC members who sit on committees of other IBs. In contrast, the results reveal that bank size and board of directors’ composition have no bearing upon the presence of directors with cross-memberships. There has been an ongoing debate on whether directors in conventional corporations’ boardrooms should be restricted from sitting on multiple boards due to concerns over monitoring and oversight quality. However, the discussion on SC directors’ multiple memberships has been scarce. Therefore, the paper provides a background for future research and helps stakeholders of the contemporary Shari’ah governance debate to understand the determinants of SC multiple directorships better.
JEL Classification Codes: G21, G30, G34.
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