THE EFFECT OF CEO’S ATTRIBUTES AND ZAKAT ON THE PERFORMANCE OF ISLAMIC BANKS

Abstract

This paper aims to examine the impact of CEO attributes and Zakat on the performance of Islamic banks in the MENA region and Malaysia. In this paper, we test the effect of CEO tenure, foreign CEO, CEO duality, CEO education level and Zakat on the Islamic bank performance measured by ROA. The sample comprises 126 firm-year observations of 42 Islamic banks from MENA countries and Malaysia that registered over the period of 2017-2019. To overcome the problems of heteroscedasticity and autocorrelation, we apply the generalized least square (GLS) panel regression. The findings of the regression show the great impact of CEO attributes (Tenure, nationality, duality, education level) and Zakat on Islamic banks performance. We control the robustness of our main results by testing the impact of our independent and control variables on bank performance measured by ROE. The results of this test confirm in general our main results. 

To our knowledge, this paper is the first to provide empirical evidence regarding the effect of CEO attributes (CEO nationality, CEO tenure, CEO duality and CEO education level) and Zakat all together on the performance of Islamic banks. To our knowledge, the analysis of the effect of CEO nationality on Islamic banks performance is also new.