Financial Performance in Islamic Banking and Shari’ah Supervision under Interventionist Regulatory Approach: A System-GMM Dynamic Panel Analysis

The relationship between Shari’ah supervision and Islamic banks’ (IBs) performance is still ambiguous particularly for banks across countries that have different regulatory environments. Pakistan adopts an interventionist approach which exclusive to governance (SG) system in Pakistan. This differs from the other adopted approaches either high or low degree of interference. Thus, this study examines how mechanism, as represented by supervisory board, its characteristics, can influence IBs sample comprises 67 bank-year observations period 2007 2015. performance-governance estimated using a range econometric techniques including dynamic system-GMM estimator. results reveal modest support positive association performance. concludes SG practices Pakistani suffer some drawbacks require more improvements respective regulators. Most these are related frameworks SSBs’ roles characteristics.