Ethical Gaps and Market Value in the Islamic Banks of Bangladesh
Review of Islamic Economics, Vol 14, No. 1, pp. 49-75, 2010
27 Pages Posted: 9 Feb 2013
Date Written: January 26, 2010
Abstract: This study measures the ethical identity of Islamic banks in Bangladesh over the period 2001 to 2006. An index of ethical identity, following Haniffa and Hudaib (2007), is constructed by drawing information revealed in the annual reports of the banks. The index is composed of eight different dimensions: (i) mission and vision statement, (ii) board of directors and top management, (iii) products and services, (iv) zakah, charity and benevolent fund, (v) commitment towards employees, (vi) commitment towards debtors, (vii) commitment towards society, and (viii) Shari[ah Supervisory Board. Then, the study also investigates the relationship between the ethical identity index and market value of these banks. Results show that some of the dimensions of ethical identity are over-communicated and others under-communicated in the annual reports. A significantly positive association has been observed between the ethical identity index and market value of banks. The study recommends possible improvements in Islamic banks’ communication of their ethical identity through annual reports.
JEL Classification: C83, G21, M14, Z12
Suggested Citation: Suggested Citation