Islamic banks in Malaysia lead in risk management practices, outperforming counterparts in Egypt.
Islamic banking professionals in Malaysia and Egypt were surveyed to see how board involvement affects risk management in Islamic banks. The study found that Islamic banks in Malaysia are better at managing risks compared to those in Egypt. When boards are more involved in risk management, the risk management process improves, leading to better risk management practices in Islamic banks. This suggests that boards should play a key role in overseeing and improving the risk management culture of banks. The results can help policymakers in these countries develop effective risk management processes that involve boards and Shari’ah supervisory boards.