Stability efficiency in Islamic banks: Does board governance matter?

We contribute to the literature by examining the extent to which Shariah board governance in Islamic banks influences stability efficiency. We find a positive association between Shariah board governance and stability efficiency using a sample of 94 Islamic banks from 28 countries during the period 2003-2018. Our result holds when we employ the propensity score matching estimates, instrumental variable approach and dynamic panel GMM approach to address potential endogeneity issues. Further tests reveal that the effect of Shariah board governance on stability efficiency is more pronounced in countries with lower national governance than higher national governance and in large Islamic banks than their small peers. (C) 2020 Elsevier B.V. All rights reserved.