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Papers by Abdesslam Menacer
The marketplace from an Islamic ethical practice (i-EP) would be concerned among other things wit... more The marketplace from an Islamic ethical practice (i-EP) would be concerned among other things with the process of getting the right supplies from the right suppliers, performing Shariah compliance processes efficiently and innovatively with the ultimate aim of providing halal, green, ethical and socially responsible products and services to customers. The main aim of this study is to examine the marketplace dimension of 37 Malaysian Islamic Financial institutions for the year 2012. A content analysis of the annual and sustainability reports was employed to examine their current marketplace practices. Semi-structured interviews were also conducted to confirm the results and to clarify arising issues. The results of the content analysis revealed that the focus of disclosure for the marketplace dimension was on the stakeholder engagement activities followed by the marketing activities. The disclosure of Islamic principles and values in market-related policies was given the least attention. This suggests that the Islamic financial institutions were not strategically incorporating the Islamic principles and values into the policies related to their marketplace dimension. To a certain extent, the results of the interviews provide support for the results of the content analysis. The interviews performed revealed that the motivation for stakeholder engagement for Islamic institutions was to resolve zakat distribution issues.
The objective of this paper is to ascertain whether Islamic banks do in fact manage profit distri... more The objective of this paper is to ascertain whether Islamic banks do in fact manage profit distributions and if so, what factors are associated with the extent of profit distribution management. The results suggest that most Islamic banks manage profit distributions, with the extent of profit distribution directly related to religiosity, financial development, asset composition, and existence of discretionary reserves, while it is inversely related to market familiarity with Islamic banking, market concentration, depositor funding reliance and the age of the Islamic bank.
The main purpose of this paper is to examine the compliance of investment deposit return with pro... more The main purpose of this paper is to examine the compliance of investment deposit return with profit and loss sharing principle. This compliance is analyzed through the impact of bank's risk, governance mechanisms and competition environment on investment deposit return. We use a pooled regression model applied to a panel of sixty Islamic banks during the period 2004-2012. The estimation indicates that the management of investment deposit and PLS assets is characterized by a moral hazard behavior and excessive risk taking. The estimation reveals that capital ratio and interest rate affect positively investment deposit return. Small Islamic banks offer a better return deposit compared to the large bank. We find no impact of board of directors and Sharia board. Following these results, we suggest that investment accounts holders should be integrated in the bank governance system. Besides, the Islamic banks are incited to develop a new generation of investment deposits. JEL Classification: C23, D74, G21, G32
The performance and accountability of boards of directors and effectiveness of governance mechani... more The performance and accountability of boards of directors and effectiveness of governance mechanisms continue to be a matter of concern. Focusing on differences between conventional banks and Islamic banks, we examine the effect of (i) Shari'ah supervision boards, (ii) board structure and (iii) CEO-power on performance during the period 2005–2011. We find Shari'ah supervision boards positively impact on Islamic banks' performance when they perform a supervisory role, but the impact is negligible when they have only an advisory role. The effect of board structure (board size and board independence) and CEO power (CEO-chair duality and internally recruited CEO) on the performance of Islamic banks is overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards but also emphasize the need for enforcement and regulatory mechanism for them to be more effective.
JEL classification: C44 C45 C25 G21 G28 K.B. Khediri et al. / Research in International Business ... more JEL classification: C44 C45 C25 G21 G28 K.B. Khediri et al. / Research in International Business and Finance 33 (2015) 75-98
This study examines the role of country of origin on the relationship between corporate governanc... more This study examines the role of country of origin on the relationship between corporate governance and sustainability practices in Islamic Financial Institutions (IFIs). Different from conventional financial institutions, the IFIs has a group of Shariah Supervisory Board (SSB) to act as the governance decision maker and a gate keeper to the institutions in ensuring that IFIs will comply with the Shariah laws. Thus, the corporate governance dimension in this study includes the size of SSB in addition to the size of board members, the number of independent directors, and the aspects of environmental, social, and profit in the IFIs' mission and/or vision. A total sample of 82 IFIs in Gulf Council Cooperation (GCC) and Non-GCC countries were examined. The study found that the board size, directors' independence, and the aspects of environmental, social and profit in the mission and/or vision have positive relationship for IFIs in GCC countries. However, the size of SSB is found to have insignificant relationship with the sustainability practices of IFIs. The country of origin is found to have a moderating role on the relationships between all of the corporate governance dimensions with sustainability practices except for the size of SSB and sustainability practices relationship. This implies that the size of SSB of IFIs in GCC countries does not have a great influence towards sustainability practices as compared to the size of SSB in non-GCC countries.
This paper investigates the impact of ownership structure, measured by two dimensions: nature of ... more This paper investigates the impact of ownership structure, measured by two dimensions: nature of owners and ownership concentration, on bank risk, controlling for country and bank specific traits and other bank regulations. Particularly, it compares risk-taking behaviour of conventional and Islamic banks in 10 MENA countries under three types of bank ownership (family-owned, company-owned and state-owned banks) over the period 2005e2009. The result shows a negative association between ownership concentration and risk. We also find that different categories of shareholders have different risk attitudes. Family-owned banks have incentives to take less risk. State-owned banks display higher risk and have significantly greater proportions of non-performing loans than other banks. By comparing conventional and Islamic banks, the empirical findings show that private Islamic banks are as stable as private conventional banks. However, Islamic banks have a lower exposure to credit risk than conventional banks.
This paper examines the relationship between corporate social responsibility (CSR) and financial ... more This paper examines the relationship between corporate social responsibility (CSR) and financial performance in Islamic banks. Using a comprehensive CSR index covering ten dimensions, we analyse the CSR disclosures in a sample of 90 Islamic banks across 13 countries. The CSR disclosure index shows that Islamic banks engage across the range of social activities, both as individual banks and as countries. However Islamic banks seem to show more commitment to the vision and mission, the board and top management, and the financial product/services dimensions, whilst least attention is paid to the environment dimension. Islamic banks also show a considerable awareness of the mandatory disclosure recommendations of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) however, they pay less attention to the voluntary CSR disclosure. Moreover, we find a pronounced emphasis in Islamic banks strategy towards more universal disclosures , suggesting the legitimacy of these banks is reinforced through disclosure to the wider stakeholder community. The empirical analysis highlights a positive association between CSR disclosure and financial performance. We also find a positive and highly significant association between the Shari'ah supervisory board (SSB) size and CSR disclosure index. Finally, the results of the three-stage least squares estimation show that the causality between the two endogenous variables runs from financial performance to CSR disclosure. Thus CSR disclosure is determined by financial performance.
The marketplace from an Islamic ethical practice (i-EP) would be concerned among other things wit... more The marketplace from an Islamic ethical practice (i-EP) would be concerned among other things with the process of getting the right supplies from the right suppliers, performing Shariah compliance processes efficiently and innovatively with the ultimate aim of providing halal, green, ethical and socially responsible products and services to customers. The main aim of this study is to examine the marketplace dimension of 37 Malaysian Islamic Financial institutions for the year 2012. A content analysis of the annual and sustainability reports was employed to examine their current marketplace practices. Semi-structured interviews were also conducted to confirm the results and to clarify arising issues. The results of the content analysis revealed that the focus of disclosure for the marketplace dimension was on the stakeholder engagement activities followed by the marketing activities. The disclosure of Islamic principles and values in market-related policies was given the least attention. This suggests that the Islamic financial institutions were not strategically incorporating the Islamic principles and values into the policies related to their marketplace dimension. To a certain extent, the results of the interviews provide support for the results of the content analysis. The interviews performed revealed that the motivation for stakeholder engagement for Islamic institutions was to resolve zakat distribution issues.
The objective of this paper is to ascertain whether Islamic banks do in fact manage profit distri... more The objective of this paper is to ascertain whether Islamic banks do in fact manage profit distributions and if so, what factors are associated with the extent of profit distribution management. The results suggest that most Islamic banks manage profit distributions, with the extent of profit distribution directly related to religiosity, financial development, asset composition, and existence of discretionary reserves, while it is inversely related to market familiarity with Islamic banking, market concentration, depositor funding reliance and the age of the Islamic bank.
The main purpose of this paper is to examine the compliance of investment deposit return with pro... more The main purpose of this paper is to examine the compliance of investment deposit return with profit and loss sharing principle. This compliance is analyzed through the impact of bank's risk, governance mechanisms and competition environment on investment deposit return. We use a pooled regression model applied to a panel of sixty Islamic banks during the period 2004-2012. The estimation indicates that the management of investment deposit and PLS assets is characterized by a moral hazard behavior and excessive risk taking. The estimation reveals that capital ratio and interest rate affect positively investment deposit return. Small Islamic banks offer a better return deposit compared to the large bank. We find no impact of board of directors and Sharia board. Following these results, we suggest that investment accounts holders should be integrated in the bank governance system. Besides, the Islamic banks are incited to develop a new generation of investment deposits. JEL Classification: C23, D74, G21, G32
The performance and accountability of boards of directors and effectiveness of governance mechani... more The performance and accountability of boards of directors and effectiveness of governance mechanisms continue to be a matter of concern. Focusing on differences between conventional banks and Islamic banks, we examine the effect of (i) Shari'ah supervision boards, (ii) board structure and (iii) CEO-power on performance during the period 2005–2011. We find Shari'ah supervision boards positively impact on Islamic banks' performance when they perform a supervisory role, but the impact is negligible when they have only an advisory role. The effect of board structure (board size and board independence) and CEO power (CEO-chair duality and internally recruited CEO) on the performance of Islamic banks is overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards but also emphasize the need for enforcement and regulatory mechanism for them to be more effective.
JEL classification: C44 C45 C25 G21 G28 K.B. Khediri et al. / Research in International Business ... more JEL classification: C44 C45 C25 G21 G28 K.B. Khediri et al. / Research in International Business and Finance 33 (2015) 75-98
This study examines the role of country of origin on the relationship between corporate governanc... more This study examines the role of country of origin on the relationship between corporate governance and sustainability practices in Islamic Financial Institutions (IFIs). Different from conventional financial institutions, the IFIs has a group of Shariah Supervisory Board (SSB) to act as the governance decision maker and a gate keeper to the institutions in ensuring that IFIs will comply with the Shariah laws. Thus, the corporate governance dimension in this study includes the size of SSB in addition to the size of board members, the number of independent directors, and the aspects of environmental, social, and profit in the IFIs' mission and/or vision. A total sample of 82 IFIs in Gulf Council Cooperation (GCC) and Non-GCC countries were examined. The study found that the board size, directors' independence, and the aspects of environmental, social and profit in the mission and/or vision have positive relationship for IFIs in GCC countries. However, the size of SSB is found to have insignificant relationship with the sustainability practices of IFIs. The country of origin is found to have a moderating role on the relationships between all of the corporate governance dimensions with sustainability practices except for the size of SSB and sustainability practices relationship. This implies that the size of SSB of IFIs in GCC countries does not have a great influence towards sustainability practices as compared to the size of SSB in non-GCC countries.
This paper investigates the impact of ownership structure, measured by two dimensions: nature of ... more This paper investigates the impact of ownership structure, measured by two dimensions: nature of owners and ownership concentration, on bank risk, controlling for country and bank specific traits and other bank regulations. Particularly, it compares risk-taking behaviour of conventional and Islamic banks in 10 MENA countries under three types of bank ownership (family-owned, company-owned and state-owned banks) over the period 2005e2009. The result shows a negative association between ownership concentration and risk. We also find that different categories of shareholders have different risk attitudes. Family-owned banks have incentives to take less risk. State-owned banks display higher risk and have significantly greater proportions of non-performing loans than other banks. By comparing conventional and Islamic banks, the empirical findings show that private Islamic banks are as stable as private conventional banks. However, Islamic banks have a lower exposure to credit risk than conventional banks.
This paper examines the relationship between corporate social responsibility (CSR) and financial ... more This paper examines the relationship between corporate social responsibility (CSR) and financial performance in Islamic banks. Using a comprehensive CSR index covering ten dimensions, we analyse the CSR disclosures in a sample of 90 Islamic banks across 13 countries. The CSR disclosure index shows that Islamic banks engage across the range of social activities, both as individual banks and as countries. However Islamic banks seem to show more commitment to the vision and mission, the board and top management, and the financial product/services dimensions, whilst least attention is paid to the environment dimension. Islamic banks also show a considerable awareness of the mandatory disclosure recommendations of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) however, they pay less attention to the voluntary CSR disclosure. Moreover, we find a pronounced emphasis in Islamic banks strategy towards more universal disclosures , suggesting the legitimacy of these banks is reinforced through disclosure to the wider stakeholder community. The empirical analysis highlights a positive association between CSR disclosure and financial performance. We also find a positive and highly significant association between the Shari'ah supervisory board (SSB) size and CSR disclosure index. Finally, the results of the three-stage least squares estimation show that the causality between the two endogenous variables runs from financial performance to CSR disclosure. Thus CSR disclosure is determined by financial performance.