The impact of board administration on risk and financial stability of Islamic banks: an empirical investigation

Abstract

The board of directors , risk and financial stability are important variables in the banking literature . Indeed , they are important for shareholders and other stakeholders of the bank .In this article , we have studied a sample of 40 banks ( 20 Islamic banks and 20 conventional banks ) in GCC countries over the period (2006…2012).

We found that only the presence of institutional investors on the board of directors influence the financial stability of conventional banks . The Islamic banks are more stable when the debt ratio is low . The bank size has a positive but not significant impact on the financial stability of Islamic banks . This effect is negative on financial stability of conventional banks .

Key words: board of directors , Islamic banks , conventional banks , risk , financial stability