The impact of adherence to governance principles on the financial performance efficiency of Yemeni Islamic banks according to the SCAMELS model (a field and applied study)

The study aimed to examine the impact of compliance with corporate governance principles on the efficiency of financial performance in Yemeni Islamic banks, according to the SCAMELS model.
The research focused on six key governance principles: the existence of an effective and binding governance framework, shareholders’ rights and equitable treatment, the role of regulatory bodies and investors, disclosure and transparency, sustainability and resilience, and the responsibilities of the board of directors — and analyzed the effect of each on financial performance efficiency.
Subsequently, the SCAMELS model was applied, which is based on seven main dimensions: Capital Adequacy, Asset Quality, Management Efficiency, Earnings, Liquidity, Sensitivity to Market Risk, and Shari’ah Compliance, to measure the financial performance of these banks.

The descriptive–analytical method was employed, and a field study was conducted using a structured questionnaire as the main data collection tool. The study population included employees of Yemeni Islamic banks, specialized staff from the Central Bank of Yemen, and external auditors, with a sample of 275 specialists representing various administrative and supervisory levels. Data were analyzed using the Statistical Package for the Social Sciences (SPSS). The results revealed a strong positive effect of compliance with governance principles on the financial performance efficiency of Yemeni Islamic banks according to the SCAMELS model. Furthermore, all six governance dimensions significantly contributed to enhancing financial performance, although the degree of their impact varied. The SCAMELS model was also applied to the average performance of Yemeni Islamic banks for the years 2020–2023, showing strong capital adequacy and liquidity, low market risk sensitivity (strong rating), and moderate management efficiency and profitability due to the prevailing economic conditions, along with weak Shariah compliance attributed to insufficient Shariah-related disclosure and transparency.The study recommends adopting the SCAMELS model as a national supervisory benchmark and updating banks’ governance manuals in line with the latest G20/OECD Principles (2023) to align with modern developments in disclosure, sustainability, and risk management.