THE IMPACT OF SHARIAH GOVERNANCE, RISK MANAGEMENT AND FINANCIAL INNOVATION UPON PERFORMANCE: ORGANIZATIONAL AGILITY AS MEDIATOR

Muhammad Mohsen Liaqat; Shrafat Ali Sair; Aamir Sohail

Muhammad Mohsen Liaqat Assistant Professor, Department of Business, Istanbul Health and Technology University, TURKEY
Shrafat Ali Sair Assistant Professor, Hailey College of Commerce, University of the Punjab Lahore, Pakistan
Aamir Sohail Lecturer, Department of Commerce, Thal University Bhakkar, Punjab, Pakistan

Keywords: Shariah Governance, Risk Management, Financial Innovation, Performance of Islamic Financial Institutions, Organizational Agility

Abstract

This study examined the impact of Shariah governance, risk management, and financial innovation on performance of Islamic financial institutions (IFIs) in Pakistan, with a specific focus on mediating role of organizational agility. A quantitative research design was employed, and data were collected through structured questionnaire from 300 managers of Islamic banks across Pakistan. The findings, analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM), revealed that Shariah governance and risk management had a significant effect upon IFI performance, while financial innovation exhibited moderate yet positive impact. Moreover, organizational agility partially mediated relationships, indicating that agility played crucial role in enhancing effectiveness of governance, risk management & innovation in driving performance. These results offer valued insights for policymakers and Islamic financial institutions, emphasizing the need for robust Shariah governance frameworks, proactive risk management strategies & continuous financial innovation to sustain and enhance institutional performance. This study donates to literature by integrating organizational agility as mediator, offering novel perspective on how Shariah governance, risk management, and financial innovation collectively enhance performance of Islamic financial institutions.