Corporate Governance, Shariah Governance, and Credit Rating: A Cross-Country Analysis from Asian Islamic Banks

Round 1

Reviewer 1 Report

1. The paper contains new information. Academic knowledge and analysis of credit rating for Asian Islamic banks, which is not yet widely used in Islamic banking system, will be great help in the future. The 14 hypotheses are novel and interesting.
2. The paper provides good overview of the relevant literature. There are enough prior studies and reviews of previous studies.
3. The methodology is appropriate and analysis is well done.
4. The results are presented clearly.
5. The paper has implications for research and practice.
6. Please check the format and description of references.

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. The authors have carefully considered the comments and tried our best to address every one of them. We hope the manuscript after careful revisions meet your high standards. The authors welcome further constructive comments if any. Below we provide the point-by-point responses. All modifications in the manuscript have been highlighted in red.

Regards

Author Response File: Author Response.pdf

Reviewer 2 Report

Abstract 

Authors have elaborated study on Islamic banks and the paper concentrates on the features on the correspondence between corporate governance, shariah governance and credit rating on a sample of 22 banks in Islamic countries. The abstract is well written.

Introduction: the authors argue that Islamic banks performed better in the years of the financial crisis than conventional banks and provide some reasons for that. 

Past literature:

The key previous studies on Islamic banking are summarised. The present study is related very closely related to study "CORPORATE GOVERNANCE AND CREDIT RATING: EVIDENCE OF SHARIAH GOVERNANCE FROM PAKISTAN ISLAMIC BANKS " 

Methodology: is well explained

Findings: are well characterised and summarized.

Discussion :

I think deeper discussion and deeper explanation is needed on the rules of Islamic banking. What are the similarities and difference between traditional and Islamic banking? It seems to me from the hindsight that in this paper the authors expect that Islamic banks more or less follow the same rules as traditional western banks. What are the differences in the credit rating of Islamic banks are these differences sufficient?

Conclusion:

The authors conclude that line 354 „credit rating evaluators must consider the Shariah board attributes while evaluating the Islamic banks' credit rating. „…further more results of this study are linked with previous studies line 356 „The results also confirm that [1]and [2] studies that shariah governance attributes significantly affect the credit rating.“ I think it is important also to see who are the investors to these banks, which may be difficult to discern. 

I think it is also important to see who are the investors to these banks, which may be difficult to discern. Are the investors to Islamic banks originally investors from Islamic countries than know the rules of sharia or the shares widely dispersed amongst the shareholders are from all over the world. These investors may not be involved with sharia rules, yet they indirectly manage these banks through their holdings

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. The authors have carefully considered the comments and tried our best to address every one of them. We hope the manuscript after careful revisions meet your high standards. The authors welcome further constructive comments if any. Below we provide the point-by-point responses. All modifications in the manuscript have been highlighted in red.

Regards

Author Response File: Author Response.pdf

Reviewer 3 Report

The abstract contains main required components and it forms coherent text with logical conclusions and interactions between its immanent parts. The title of the paper is well formulated and it covers the content. The introduction logically follows the aim of the paper and it provides valuable introspection into solved topic. Methodological part of the paper suits current scientific standards. The appropriate statistical apparatus is described adequately. However, it could be enriched by formulas and explication of statistical background which has been used in wider sense. The results are presented clearly. The interpretation of tables and figures is acceptable. However, wider context of the presentation of the results should be applied to make the results really understandable for the audience. The level of the author’s knowledge is satisfying. It is obvious that authors are well oriented in the topic and that they use appropriate terms. The overall level of language is appropriate. Quotations respect APA style. The formatting of the tables is rather poor. Formal corrections are needed. Authors don´t use recent literature. It would be useful to enrich the literature and to include also references from journals indexed in reputable databases (WoS resp. Scopus) in last two years. The paper is suitable to be published after minor corrections which should lie especially in inclusion of more recent literature as well as re-formatting of the paper according to the instructions included in the review.

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. The authors have carefully considered the comments and tried our best to address every one of them. We hope the manuscript after careful revisions meet your high standards. The authors welcome further constructive comments if any. Below we provide the point-by-point responses. All modifications in the manuscript have been highlighted in red.

Regards

Author Response File: Author Response.pdf

Reviewer 4 Report

The paper focus on an interesting and innovative topic, as the influence of shariah governance on credit rating. Although the sample is small in size, the research design is appropriate and the findings are quite significant.

However, in my opinion, the study has some shortages, failures and inaccuracies which should be improved and solved before publication.

A minor spell check would be required. In a few cases, the definition of independent variables is unsatisfactory and their justification in the Hypothesis Development section is below expectation. In the context of this analysis, what is the meaning of Board Independence? Why the definition of Board Interlock is restricted to 5 or more positions in the other Financial institution board? These definitions should be correctly justified.

In general, justification of variables, concepts and methods have to go far beyond the mere citation of previous research. Why the authors consider that these items have to be included in their paper? I cannot find an appropriate answer to this question, just a list of concepts,  related variables and citations of previous research. The literature review is scarce and the theoretical background probably should be revised to support the objectives of the research. A few references and the last sentences in the Introduction are insufficient to provide an adequate context, unless the authors make more clear the specific and differentiate contribution of this paper to the existing literature. The rationale of hypothesis is unconvincing because of this weak connection. For example, the theoretical background supporting the inclusion of CEO attributes is scanty. If evidences of previous research are limited, please make it more clear in the paper.

The authors abuse the employment of the filler "Ceteris Paribus". The methodology is based on a ordered logistic regression, so that coefficients show odd ratios providing information about the influence of a one unit increase in every independent variable on credit rating, given that the other variables in the model are held constant. The authors should explain it in the paper. In addition, the selection of this research method has to be more clearly justified in the Materials and Methods section, specially because the investigation is based on time series of data.

The analysis of results is clearly unsatisfactory. Be careful, the table 3 does not display results but only the description of variables. Any comment about the Correlation matrix (Table 5), other than citing the different typologies of attributes? The examination should be focused on the findings shown in Table 4. However, the authors simply describe the value and statistical significance of coefficients. This section is frankly poor, because it should respond to what the researchers have found. And the most representative results should be clearly presented and stood out. I can read only a brief description of the figures included in the table, without any prevalence or criterion. In addition, the variables with no impact on credit rating seem not to deserve any attention by the authors.  

Unfortunately, as the results are essential for analysis, both the Discussion and Conclusion sections may be significantly improved. The authors need to make the Discussion section corresponding to the Results section, but do not reiterate these outputs again. Comparing the results with previous research is extremely valuable, but the arguments are unclear and weakly rooted. To what  busyness hypotheses do you refer? You the members skills, stating that "the business background knowledge board members can effectively monitor the Islamic bank complicated statements, evaluate the internal control system and can suggests the improvement in financial matters", but the irrelevance of  the "Shariah board Accounting and Finance knowledge" in the model is not commentated at all.

The authors should avoid statements that go beyond what the results can support. Some speculations on possible interpretations are welcome but they always have to be rooted in facts and evidences. Do you have any proof in the paper (or previous studies) that foreign directors have low attendance due to the money and time constraints?

One of the most significant findings in the paper is the gender dimension. It is not been sufficiently highlighted in the Results section. I am not sure that, in the discussion section, this prominent effect of women's participation in the board of directors is correctly understood.  Do you have evidences that "presence of women enhance the more disciplined attitude in the board members and women prefer team work rather than hierarchy which results effective monitoring function" and that " the women has more accounting and finance knowledge background than men, prefer team work and have less attendance issues which results the high shariah compliance in the banks"? If your statements are the consequence of the correlation matrix of previous findings, you should indicate that point.

I encourage the authors to meliorate the value of their interesting work, by improving the structure and contents of this science paper.

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. The authors have carefully considered the comments and tried our best to address every one of them. We hope the manuscript after careful revisions meet your high standards. The authors welcome further constructive comments if any. Below we provide the point-by-point responses. All modifications in the manuscript have been highlighted in red.

According to the Recommendation of Expert, the Authors put efforts to improve the language and overcome the grammar mistakes in this revised draft.

Further Authors try to improve the different sections in Research papers including Introduction, Methodology, Tables, Results, Discussion and Conclusion Section to enhance the quality of the Research. All changes available in Track Changes.

Regards

Author Response File: Author Response.pdf

Reviewer 5 Report

Dear authors,

Thank you so much for the opportunity to review the manuscript entitled “Corporate Governance, Shariah Governance and Credit Rating”.

The paper addresses an interesting issue of the association between corporate governance characteristics, sharaih governance characteristics and credit rating of Asian Islamic banks.

However, I would like to see more support exploration on the choices of the theoretical ideas, data and the interaction of literatures with findings.

I have concerns about the execution of this paper, as illustrated in details below.

In any case, I think there are some areas where improvement can be made.

Hope my suggestions are useful.

1. In your abstract (line 4), the authors need to provide a more detailed explanation about credit rating scale, instead of denoting numbers like [1] and [2].
2. I suggest to include contribution in the ‘Conclusion’ section rather than putting them in ‘Introduction’.
3. In introduction, there should be answering of the “so what” question along the way.
4. Literature review are patchy and mixes issues. It should be better organized and streamlined. It seems necessary to supplement the logical basis for the Hypothesis Development. I

suggest the author(s) to combine the previous research with the hypothesis so that they can

be connected well.

5. Hypotheses are somewhat confusing. It would be better to reorganize the hypotheses that can be well linked with the analysis results. Or the authors might consider grouping characteristics that have a negative effect on the credit rating and characteristics that have a positive effect. In particular, in case of Hypothesis 3.4, there seems to be a lack of reliability in measuring knowledge variables in Accounting and finance knowledge. Have you ever thought about using the number of people with accounting/finance related license as a variable? Furthermore, you set a number of hypotheses and even many of them were rejected. I suggest again reorganization of hypotheses.
6. Considering the composition of a typical paper, it would be better to change the order of Table 4 and Table 5. Also, if the expected sign is included in Table 4, it will be helpful to understand the result analysis of the hypothesis.
7. Interpretation and discussion of the analysis results are very important part of the paper, but the explanation seems insufficient. The discussion section is not yet sufficiently thought-through and not yet convincing.
8. The analysis results show that only 9 out of 15 hypotheses significantly support the hypothesis. In the interpretation of the results, there is no mention of the results that came out contrary to the predictions or were not significantly. It is difficult to find the sufficient focus on flow, structure and clarity
9. The ‘Conclusion’ section must be supplemented. I suggest to briefly summarize the analysis results and include implications / limitations of the paper.
10. The authors need to proofread the manuscript carefully.
11. You need to seriously proofread the paper.
12. There are many typos, grammatical errors, and awkward and vague language throughout the paper.

To point out a few things:

-p.3, line 118: there is no period.

-p.4, line 177: H7, written twice.

-p.5, line 222: but14à please check the spacing.

-p.5, in Table 1. Board size description, please check the spacing.

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. The authors have carefully considered the comments and tried our best to address every one of them. We hope the manuscript after careful revisions meet your high standards. The authors welcome further constructive comments if any. Below we provide the point-by-point responses. All modifications in the manuscript have been highlighted in red.

According to the Recommendation of Expert, Authors put efforts to improve the language and overcome the grammar mistakes in this revised draft.

Further Author tries to improve the different sections in the Research papers including the Introduction, Methodology, Tables, Results, Discussion and Conclusion Section to enhance the quality of the Research. All changes available in Track Changes.

Regards

Author Response File: Author Response.pdf

Round 2

Reviewer 4 Report

All the requests han been successfully met

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. Authors are very thankful to you for your valuable comments.

Regards

Reviewer 5 Report

First of all, I would like to thank the author(s) for all the effort they have put so far in the improvement of the paper.

The authors have changed the paper aiming to incorporate the comments and suggestions of reviewers, including myself.

However, the authors have not responded properly or reflected some of my comments. I still have some concerns that the authors should be address in a revision.

For example, the following issues still require some amendments:

Regarding Point 1.

In your abstract (line 4), the authors STILL need to provide an explanation about credit rating scale, instead of denoting numbers like [1] and [2].

Regarding Point 8.

Please supplement the analysis results that came out contrary to the predictions or were not significantly.

In conclusion section,

It's better not to use colons (for implications, contributions, and limitations).

Author Response

Firstly I am very thankful and appreciate reviewers for your precious time in reviewing our paper and providing valuable comments. It was your valuable and insightful comments that led to possible improvements in the current version. The authors are very thankful to you for your valuable comments.

Regards

Author Response File: Author Response.pdf