Chief Executive Officer’s (CEO’s) Characteristics and Bank Performance: A Comparative Study of Islamic and Conventional Banks in Tunisia
DOI:
https://doi.org/10.13135/2421-2172/8871Keywords:
Bank performance, CEO’s-education, Islamic-banks, Conventional-banks, Delegation of decision-making authorityAbstract
This study examines the impact of CEO characteristics on bank performance within the Tunisian banking sector, focusing on a dataset of 1,340 professionals spanning from 2018 to 2022. Specifically, we compare Islamic and conventional banks, analyzing CEO traits such as educational background and decision-making authority. Our findings reveal higher customer satisfaction levels in Islamic banks (75%) compared to conventional banks (45%). CEO educational background positively influences bank performance in both bank types, with variations in ideal backgrounds. Larger banks tend to perform better, and greater CEO decision-making delegation enhances performance, contradicting the New Institutional Theory. Additionally, the age and frequency of CEO-board meetings significantly affect conventional bank performance. At the same time, these variables are less significant in Islamic banks due to their smaller size and older CEO demographics. Overall, our research highlights the critical role of CEO characteristics in shaping bank performance. This study provides valuable guidance for organizational leadership and regulatory bodies seeking to optimize banking operations. Understanding the impact of a CEO's educational background and decision-making authority on performance underscores the importance of strategic leadership in navigating dynamic market conditions. These insights are crucial for fostering resilience and competitiveness within the Islamic and conventional banking sectors.
References
Adams, R., Almeida, H., Ferreira, D., (2005). “Powerful CEOs and their impact on Corporate Performance”. The Review of Financial Studies. 18 (4), 1403–1432.
Alexandre D. Lucas A. (2013). “Concentration of Power and Corporate Performance Variability” Electronic copy available at: http://ssrn.com/abstract=2225355.
Alice, O., Andrews, T., & Welbourne, M. (2000). “The People/Performance Balance in IPO firms: The Effect of the Chief Executive Officer’s financial Orientation Entrepreneurship Theory and Practice, 25(1), 93-107.
Altunbaş Y., Thornton J. and Yurtsev U. (2019). “Finance Research Letters” https://doi.org/10.1016/j.frl..05.020.
Arumona, J., E. Olayinka, L. Onmonya, and V. Omotayo. (2019). Board financial education and firm performance: evidence from the healthcare sector in Nigeria. Academy of Strategic Management Journal 18 (4): 1–10.
Ayaba H. (2012). “Chief Executive Officer’s (CEO’s) Educational Background and Firm Performance An empirical study on Manufacturing and IT listed firms in the Stockholm Stock Exchange” Master thesis in Umeå School of Business and Economics.
Bashir, M., Ali, M., Akther, N., Lam, M., Mohd Paiz, N. and Islam, M.A. (2020). “Developing an integrative customer satisfaction model: an application of customer experience in Malaysian E-banking services”, International Journal of Advanced Science and Technology, 20, pp. 868-881.
Berger, R., Dutta, S., Raffel, T, Samuels, G. (2016). “Innovating at the top: how global CEOs drive innovation for growth and profit. Palgrave Macmillan”.
Bertrand, M., and A. Schoar. (2003). Managing with style: the effect of managers on firm policies. The Quarterly Journal of Economics 118 (4): 1169–1208.
Bloom, N., Sadun, R., Van Reenen, J., (2012). “The organization of firms across countries”, Quarterly Journal of Economics, 1663-1705.
Brammer, S., Geoffrey Williams, and John Zinkin. (2007). “Religion and Attitudes to Corporate Social Responsibility in a Large Cross-Country Sample.” Journal of Business Ethics 71(3):229–43.
Brickley J. A., Smith C. W., Zimmerman J. L.. (2001). "Managerial economics and organizational architecture", Irwin-Mac Graw Hill
Bruton G. Ahlstrom D. Li H. (2010). “Institutional Theory and Entrepreneurship: Where Are We Now and Where Do We Need to Move in the Future?” Baylor University.
Calandra, D., Lanzalonga, F., & Biancone, P. P. (2024). Exploring IFRS in Islamic finance: a bibliometric and coding analysis of emerging topics and perspectives. International Journal of Islamic and Middle Eastern Finance and Management.
Calori, R., G. Johnson et P. Sarnin (1994). “CEO's Cognitive maps and the scope of the Organization”, Strategic Management Journal, 15, 437- 457.
Canales & Nanda (2012). A darker side to decentralized banks: Market power and credit rationing in SME lending. Journal of Financial Economics, 105(2), 353–366. https://sci-hub.se/https://doi.org/10.2308/acch.2005.19.3.123).
Cyert, R. M., March, J. G. (1963). “A behavioral theory of the firm”, Vol. 2. Cambridge, MA: Blackwell Business».
Dearborn D. and Simon H. (1958). “Selective Perception: A Note on the Departmental Identifications of Executives” Published by: American Sociological Association. 21(2), pp. 140-144
DiMaggio, P.J., & Powell, W.W. (1983). “The Iron cage revisited: Institutional isomorphism and collective rationality in organizational fields”. American Sociological Review, 48, 147– 160.
Dlugosz J., Gam Y., Gopalan R., Skrastin J. (2017). “Decision-making delegation in banks” Olin Business School at Washington University.
Erickson, M., M. Hanlon, and E.L. Maydew. (2006). Is there a link between executive equity incentives and accounting fraud? Journal of Accounting Research 44 (1): 113–143.
Farook, Sayd. 2007. “On Corporate Social Responsibility of Islamic Financial Institutions.” Islamic Economic Studies 15(1):31–46.
Gottesman, A.A., and M.R. Morey. (2006). CEO educational background and frm fnancial performance. Journal of Applied Finance 20 (2): 70–82.
Guner, A., U. Malmendier, and G. Tate. (2008). Financial expertise of directors. Journal of Financial Economics 88 (2): 323–354.
Gupta, N., and J. Mahakud. (2020). CEO characteristics and bank performance: evidence from India. Managerial Auditing Journal 35 (8): 1057–1093. https://doi.org/10.1108/MAJ-03-2019-2224.
Gur, N. and Bjørnskov, C. (2016). “Trust and Delegation: Theory and Evidence”.
Hambrick, C.D. (2007) “Upper Echelons Theory: An Update” Academy of Management Review, 32 (2), 334-343.
Hambrick, Donald C. and Phyllis A. Mason (1984). “Upper Echelons: The Organization as a Reflection of its Top Managers,” Academy of Management Review, IX, 193-206.
Han, S., Nanda, V., Silveri, S. (2016). “CEO power and firm performance under pressure”. Financial Management, Summer, 369-400.
Hannan, M.T., & Freeman, J.H. (1977). “The population ecology of organizations”.
Hassan, M.K., Aliyu, S. and Brodmann, J. (2017), “An introduction to Islamic banking and finance”, The Most Important Concepts in Finance, Edward Elgar Publishing, New York, NY.
Kesner, I.F., and T.C. Sebora. (1994). “Executive succession; past, present and future”. Journal of Management 20 (2): 327–337.
Kim, K.H., H.A. Al-Shammari, B. Kim, and S.H. Lee. (2009). “CEO duality leadership and corporate diversification behaviour”. Journal of Business Research, 62(11): 1173–1180.
King, T. (2016). “What's in an education? Implications of CEO education for bank performance”, Journal of Corporate Finance, http://dx.doi.org/10.1016/j.jcorpfin.2016.01.003
Ikra, S.S., Rahman, M.A., Wanke, P. and Azad, M.A.K. (2021). “Islamic banking efficiency literature (2000–2020): a bibliometric analysis and research front mapping”, International Journal of Islamic and Middle Eastern Finance and Management, 14(5), 1043-1060
Li, M., Lu, Y., Phillips, G. (2019). “CEOs and the product market: when are powerful CEOs beneficial”? Journal of Financial and Quantitative Analysis, 54
Mannan, M.A. (2015). “Islamic Banking in Bangladesh: progress and Potentials, Islami Bank Bangladesh Limited”, Dhaka, Bangladesh, pp. 5-7.
March, J. G., Simon, H. A. (1958). “Organizations” New York, NY: Wiley.
Masoud, N. (2017). “How to Win the Battle of Ideas in Corporate Social Responsibility: The International Pyramid Model of CSR.” International Journal of Corporate Social Responsibility 2(1), 4.
Matsunaga S.R., and E.P Yeung. (2008). Evidence on the impact of a CEO’s financial experience on the quality of the firm’s financial reports and disclosures. Financial Accounting and Reporting Section (FARS) Paper, 41.
Meyer, J.W., & Rowan, B. (1977). “Institutional Organizations: Formal Structures as Myth and Ceremony”: American Journal of Sociology, 83(2), 340-363.
Meyer, John W. and W. Richard Scott. (1983). “Organizational Environments: Ritual and Rationality”. London: Sage. 296 pp.
Milliken, F.J., and L. Martins. (1996). “Searching for common threads: understanding the multiple effects of diversity in organizational groups”. Academy of Management Review 21 (2): 402–433.
Mitroff, I. I., and E. A. Denton. (1999). “A Spiritual Audit of Corporate America: A Hard Look at Spirituality, Religion, and Values in the Workplace”. San Francisco: Jossey Bass.
Noura Z., Tarek, S., & Daniel, L. (2023). “Ceo’s field of study and bank attention to digital transformation: moderating role of CEO characteristics”. Journal of Economics and Economic Education Research, 24(S2),1-15.
Norburn, D. (1989). “The chief executive: a breed apart”. Strategic Management Journal 10 (1): 1–15.
Nourhen Sallemi and Ghazi Zouari. (2023) “The effect of CEO characteristics on Takaful performance” International Journal of Disclosure and Governance, 20, 70–82. https://doi.org/10.1057/s41310-022-00161-5
Pathan, S., (2009). “Strong boards, CEO power and bank risk-taking”. J. Bank. Finance 33, 1340–1350.
Rajagopalan, N., and D.K. Dutta. (1996). “CEO characteristics: does industry matter?”. Academy of Management Journal 39 (1): 197–215.
Salancik, G.R., and J. Pfefer. (1978). “Who gets power – and how they hold on to it: a strategic contingency model of power”. Organizational Dynamics 5 (3): 3–21.
Schrand, C.M., and S.L.C. Zechman. (2012). “Executive overconfdence and the slippery slope to financial misreporting”. Journal of Accounting and Economics, 53 (1–2): 311–329
Senyuta O. (2013). “Delegation and performance” Published by Charles University in Prague, Center for Economic Research and Graduate Education (CERGE) and Economics Institute of the ASCR.
Skrastins J. & Vikrant V. (2019). “How Organizational Hierarchy Affects Information Production” The Review of Financial Studies, 32(2), 564–604
Tran H. and Turkiela J., (2019) “The powers that be: Concentration of authority within the board of directors and variability in firm performance”, Journal of Corporate Finance.
Wegge, J., C. Roth, B. Neubach, K.H. Schmidt, and R. Kanfer. (2008). “Age and gender diversity as determinants of performance and health in a public organization: the role of task complexity and group size”. Journal of Applied Psychology 93(6): 1301–1313.
Downloads
Published
How to Cite
Issue
Section
License
EJIF content is licensed under a Creative Commons Attribution 4.0 International License.
Authors keep the copyrights for their work and give the journal the work's first publication copyright, which is at the same time licensed under a Creative Commons License – Attribution, which in turn allows other parties to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
EJIF has been approved for inclusion in 
EJIF has been approved for inclusion in 
EJIF is a member of 
EJIF is indexed by 
EJIF is listed in the ANVUR (Italian National Agency for the Evaluation of Universities and Research Institutes) as a scientific journal in both 
