ASSESSING THE IMPACT OF SHARIAH COMMITTEE CHARACTERISTICS ON THE FINANCIAL PERFORMANCE OF MALAYSIAN ISLAMIC BANKS (2019-2023)
Keywords:
Shariah Governance, Shariah Committee, Performance.Abstract
The Shariah Committee plays a key role in the Shariah governance framework of Islamic banks. This study aims to assess the impact of Shariah Committee characteristics on the financial performance of Islamic banks in Malaysia, from the perspective of Agency Theory. To achieve this, regression analysis was conducted using data from 15 Islamic banks covering the period from 2019 to 2023. The findings reveal that only the frequency of Shariah Committee meetings has a positive and significant impact on the financial performance of Islamic banks. In contrast, the size of the committee, the number of members holding PhD degrees, and the remuneration of the Shariah Committee do not significantly influence financial performance. This result remains consistent across the pre-COVID-19, during COVID-19, and post-COVID-19 periods. This research contributes to both academic knowledge and practical insights for Islamic banking practitioners. However, the study has some limitations. It uses only ROA and ROE as performance indicators, while other important measures, such as Zakat-based performance metrics are not considered. Exploring additional metrics such as ZOA and ZOE ratios could provide deeper insights into performance. Therefore, future research should consider including these metrics.
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