ISSN: 2225-8329
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This study discusses the empirical literature on the corporate governance and risk of conventional banks (CBs) and Islamic banks (IBs) in terms of board oversight focussing on the board of directors (BOD) characteristics and the board committees. The motivation of this review is to provide an understanding on the current state of literature in regards to how governance affect risk. The review suggests that the effects of corporate governance on risk are generally mixed. Overall, the relationship between board oversight and risk is in alignment with agency theory. This suggests that the boards are exerting their influence and oversight function on the risk management of the banks. This study finds that the literatures focus more on CBs and that research which compares the two banks type is still lacking. Additionally, studies examining IBs are mostly done with banks from specific countries or regions which might suggest that the risk profiles are region or country specific. Moreover, this review identifies the current research gap especially those that compare the corporate governance of both types of banks. The review contributes to an understanding of the importance of good governance on the management of risk and provide insights for researchers and policy makers.
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In-Text Citation: (Mohamad & Hamid, 2022)
To Cite this Article: Mohamad, A. M., & Hamid, F. S. (2022). The Relationship between Board Oversight and Risk: A Review of Conventional and Islamic Banks. International Journal of Academic Research in Accounting Finance and Management Sciences, 12(3), 26–44.
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