Journal of Operational Risk

Risk.net

Difference between the determinants of operational risk reporting in Islamic and conventional banks: evidence from Saudi Arabia

Wael Hemrit

In this study, the author investigates the operational risk reporting practices of Islamic banking institutions (IBIs) and conventional banks (CBs) in Saudi Arabia. Moreover, the paper explores the joint effect of banking characteristics, corporate governance and credit rating on the informational content of operational risk disclosure (OpRiskDISC). The paper uses content analysis to collect OpRiskDISC data from annual reports during the period 2008–15. The results for each bank type show that the enhanced OpRiskDISC in IBIs is negatively associated with the number of bank branches, the financial stability  of the bank, board meeting frequency, the proportion of independent members and credit rating. The results for CBs demonstrate that a bank’s size and financial stability are positively associated with OpRiskDISC. Conversely, the OpRiskDISC level is negatively affected by board meeting frequency and the number of bank branches. For the overall sample, the empirical results show that bank size, compliance with Sharia requirements and board size have a positive, significant effect on OpRiskDISC, while the number of bank branches and the proportion of independent members on the board have a negative, significant relationship with the disclosure level.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: