Bank Performance and Board of Directors’ Characteristics in the Context of Bangladeshi Islamic Banks

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Mohammad Fahad Noor
Zaima Ahmed
Sajedul Islam


Abstract This study focuses on investigating how bank performance is being impacted by BOD characteristics, Investment Account Holders (IAHS), and contribution to the society in the context of the Islamic Banking sector in Bangladesh for the period 2008-17. This study used only six Islamic banks' data in Bangladesh during 2008-17, and those banks are full-fledged Islamic banks. A generalized least squares (GLS) regression model has been used for this study. The empirical results show that ROA and ROE are significant, and the result shows Board size has an insignificant positive effect on ROA but the negative effect on ROE. That indicates the BODs are not selected based on their expertise and experience in Islamic banks. The result also shows that a smaller board can make quick decisions and monitoring performance effectively, and creating value. Besides that, the separation of CEO and chairman roles and the IAHs have no effect, while the chairman independence has a positive impact. As for the control variables, bank size positively influences bank performance, whereas leverage negatively affects performance. Zakah and gross domestic product produce no significant effect on bank performance.

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