Abstract:
Corporate governance (CG) have gained a prominent place in the sustainability of any institution, be it a
corporate or a bank. Individuals lack detailed knowledge on the applicability of CG and its aspects in Islamic
Banks (IBs) in contrast to Conventional Banks (CBs). Thus, the objective of this study is to explore ‘how’
and ‘why’ IBs differ from CBs in terms of structure of CG and its elements mainly board responsibilities,
legal and regulatory compliance, internal control environment and auditing from a fundamental perspective.
The study adopts interpretative methodology and multiple case study strategy in selecting one bank to
represent each banking systems. Further, primary and secondary data were collected through interviews,
observations, reports and websites. Major findings of the study concluded that IBs and CBs enclose
differences as well as similarities pertaining to their CG and selected aspects. Major differences are driven
connecting to the framework of IBs as they need to follow interest free paradigm, Profit and Loss Sharing
paradigm and Shariah principles in performing the banking functions. Hence, these major principles have
influenced for emergence of different CG structure in IBs.
