Abstract
Purpose – The purpose of this paper is to explore the perceived importance of management about
various corporate governance dimensions being practiced in the Pakistani Islamic banking context.
Design/methodology/approach – AHP is applied to analyze the corporate governance indexes and
its dimension of five Islamic banks and 12 conventional banks which are providing Islamic banking
facilities (Islamic bank window) throughout Pakistan. These dimensions included board of directors
(BOD), Shari’ah supervisory board (SSB), audit, investment account holders (IAH), and information
disclosure & transparency.
Findings – The study reveals that the most significant dimensions which affect the corporate
governance in Islamic banks are BOD and SSB, while the significant factors for Islamic banking
windows are almost all dimensions of corporate governance. The correlation, regression, and ANOVA
tests are applied to check the contributions of various factors of corporate governance mechanisms.
These results indicate that there is a significant difference between Islamic banks and Islamic banking
windows regarding the BOD and SSB. On the other hand, no significant difference is seen for the rest
of the factors. The dissatisfaction level of customers reduces with the increase in the audit and BOD
governance and all other factors have no impact in the case of Islamic banking windows; whereas in
Islamic banks, in addition to audit and the SSB, information disclosure also significantly reduces the
dissatisfaction level of customers. The concern of customers decreases significantly with the
increasing level of IAH in the case of Islamic banking windows whereas in the case of Islamic banks a
significant impact is seen for BOD, information disclosure, audit and IAH, but improvement in the
governance of these rather increases the concern of customers toward compliance of Shari’ah and SSB
has no contribution towards the concern of customers.
Originality/value – This study has practical significance for conventional and Islamic banking policy
makers for understanding the requirements of their stakeholders and aligning themwith the fundamentals
of Shari’ah compliance according to the guidelines provided by the code of corporate governance so as to
get better insight into the relationship between customers’motives behind using Islamic banking products.
Keywords Pakistan, Banks, Islam, Corporate governance, Islamic banks, Islamic corporate governance,
Shari’ah compliance, Customer satisfaction, Analytic hierarchy process