Corporate Governance Practices in Bangladesh: A Comparative Analysis between Conventional Banks and Islamic Banks

Subject Areas : General Management

S. Moudud-Ul-Huq ¹

1 - Department of Business Administration, Mawlana Bhashani Science and Technology University, Tangail, Bangladesh

Received: 2014-12-22 Accepted : 2014-12-22 Published : 2015-01-01

Keywords: Corporate Governance, comparison, Indicators, Bangladesh bank guidelines,

Abstract :

Corporate governance (CG) is an important effort to ensure accountability and responsibility and is a set ofprinciples, which should be incorporated into every part of the organization. This study focused on the state ofCorporate Governance (CG) in two categories of the banking industries: Conventional Banks and Islamic Banks.As Conventional Banks and Islamic Banks differ a great deal in their rules, regulations and operating procedures,the corporate governance (CG) practice of these two banking sectors is also different from each other. Here, inthis paper it is tried to represent a clear comparative study about corporate governance (CG) practice of these twobanking sectors. For this purpose it has been selected ten commercial banks of which five are renownedConventional Banks and the same number of Islamic Banks in Bangladesh. After exploring the scores of eachindicators it has been noticed that in average the grand score of Islamic Banks is less than the grand score ofConventional Banks to the extent of 0.07 (0.60-0.53). And in 2012 the grand score of Islamic Banks is less thanthe grand score of Conventional Banks to the extent of 0.05 (0.83-0.78). But Islamic Banks signify a higheroverall improvement score than Conventional Banks that is 0.02 (0.25-0.23). Both Conventional Banks andIslamic Banks are being imperative in practicing corporate governance (CG) as both the banking sectors arefacing significant improvement in practicing CG. But in comparison to Conventional Banks, Islamic Banks arebit lacked behind in corporate governance (CG) practices.