The Effect of Gender Diversity and Expertise of Risk Monitoring Committee on Equity Investment Risk in Islamic Banks

The study of risk in Islamic banks emphasizes more on the general risk of Islamic banks, this general risk in Islamic banks arises from transactions unrelated to special transactions of Islamic banks. The profit and loss sharing system implemented by Islamic banks raises equity investment risk (EIR). This study uses the agency theory approach in explaining EIR. In the agency theory approach, the risk monitoring committee has the responsibility of evaluating and monitoring the risk management in Islamic banks. The characteristics of risk monitoring committee members can affect the capability of the risk monitoring committee to provide risk management assessments and policies and can affect the effectiveness of the risk monitoring committee in carrying out its duties and responsibilities. The study population was 109 Islamic banks spread across 18 countries in ASEAN and the Gulf Cooperation Council, where the sample was observed in 2021 during the peak of COVID-19. The results of this study indicate that the gender diversity of the risk management committee and the risk management monitoring committee’s expertise in accounting/risk management have a significant negative effect on equity investment risk.