Abstract:
This study aims to investigate the relationship between corporate governance variables, CEO power,
and the performance of Islamic banking in East Africa. A Hierarchical panel regression model was to
test both direct and indirect effect. Panel data was collected from all 10 full-fledged Islamic banking
in East Africa and conventional banks with Islamic banking window for 7 years (2013-2020).
Empirical results showed that board independence, board financial expertise and board activity
positively affect performance of Islamic banking in East Africa. Powerful CEO negatively moderated
the effect of board independence and board financial expertise on performance of Islamic banking in
East Africa. Based on the findings, board independence, board financial expertise and board activity
play a major role on improving performance of Islamic banking. In addition, the study support
agency theory perspective that powerful CEO can reduce independence of board directors, hence
limiting board activity and board financial expertise positive contribution on performance of Islamic
banking. There has been limited studies on corporate governance and performance of Islamic
banking in East Africa. This study contributes on board independence, board financial expertise and
board activity of Islamic banking literature. The study provided crucial insight on corporate
governance variables of Islamic banking in East Africa and their link performance.
