Philanthropy, markets, and Islamic financial institutions: a new paradigm

Humanomics ◽  
2017 ◽  
Vol 33 (4) ◽  
pp. 563-578 ◽  
Author(s):  
Osamah Hussian Rawashdeh ◽  
Toseef Azid ◽  
Muhammad Azeem Qureshi
Keyword(s):  
Financial Institutions ◽  
Social Order ◽  
Positive Impact ◽  
Human Freedom ◽  
Constructive Model ◽  
Social Cooperation ◽  
Human Flourishing ◽  
Content Type ◽  
Incremental Change ◽  
Islamic Financial Institutions

Purpose There is no consensus among the experts that welfare can be increased through philanthropy or market is sufficient for the achievement of targeted level of welfare. It is still a main quest that giving visible good to one known fellow is better or market ethos have more positive impact on the society where we have needs of thousands of unknown. Markets, in Hayek’s view, are superior to philanthropy – economically, ethically and epistemologically – because they “confer benefits beyond the range of our concrete knowledge” (Hayek 1988, p. 81) and thus provide “a greater benefit to the community than most direct ‘altruistic’ action”. The same can be expected from the ethical and moral financial institutions having the objective not to only increase their profit but also equally trying to serve the community and society. This paper aims to propose a constructive model in which markets, philanthropy and financial institutions work together to enhance welfare, human freedom, flourishing and voluntary social cooperation. Design/methodology/approach This paper examines the conceptual dualisms through which commerce – philanthropy relationship (e.g. modern versus Islamic socialism) and the historical–philosophical context in which they were formulated. This helps integrate philanthropy into Hayek’s theory of economic and social order through financial institutions. Findings This paper explores the foundations of an Islamic view of philanthropic action. This discussion is inspired by the emerging literature of positive psychology and double movement of Polanyi (2001). Research limitations/implications Proper data are not available for the Islamic countries. Practical implications Without abandoning Hayek’s theory of markets, this study sketches a view of commercial society in which markets and philanthropy (“voluntary giving and association that serves to promote human flourishing”) work together to enhance welfare human freedom, flourishing and voluntary social cooperation under the umbrella of Islam and also explores the different dimensions that how Islamic financial intuitions are becoming the instrument for the incremental change of this integration. Social implications This study guides the policy makers that how social and economic welfare can be increased through the interaction of Islamic financial institutions and philanthropy. Originality/value This is an original attempt.

Shariah, presentation and content dimensions of Web 2.0 applications and the firm value of Islamic financial institutions in the GCC countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdalmuttaleb Musleh Alsartawi ◽  
Sameh Reyad ◽  
Araby Madbouly
Keyword(s):  
Web 2.0 ◽  
Financial Institutions ◽  
Firm Value ◽  
Positive Impact ◽  
Three Dimensions ◽  
Annual Reports ◽  
Stock Exchanges ◽  
Content Type ◽  
Gcc Countries ◽  
Islamic Financial Institutions

Purpose This study aims to examine the relationship between the three dimensions of Web 2.0 disclosure (Shariah, content and presentation) and the firm value of listed Islamic financial institutions (IFIs) in the Gulf Cooperation Council (GCC) stock exchanges. Design/methodology/approach A checklist of 118 items was used to measure the level of Web 2.0 disclosure for the IFIs that are listed on the GCC stock exchanges. Data were gathered from the websites of the IFI samples, where researchers looked for annual reports, RSS, widgets, web-casting and the layout and design of the websites. Findings Based on the results, the level of the Shariah dimension by GCC IFIs was 74.93%, the level of the content dimension was 76.33%, the level of the presentation dimension was 78.03% and the level of the overall Web 2.0 disclosure was 75.73%, and a positive and significant relationship between the content dimension and Tobin’s Q. Practical implications In addition to other reforms, this study recommends IFIs to improve their regulations, risk management and standardization. Originality/value This study offers a new contribution as it adds a new perspective to the online financial disclosure literature, which is the Shariah dimension. Furthermore, this study provides empirical evidence for interested parties in the Islamic banking industry such as users and regulators in the GCC countries concerning the importance and usage of Web 2.0 applications for disclosure and its positive impact on adding a premium to IFIs.

Issues and challenges of IFRS 9 in Malaysian Islamic financial institutions: recognition criteria perspective

2021 ◽  
Vol 12 (2) ◽  
pp. 239-257
Author(s):  
Marziana Madah Marzuki ◽  
Abdul Rahim Abdul Rahman ◽  
Ainulashikin Marzuki ◽  
Nathasa Mazna Ramli ◽  
Wan Amalina Wan Abdullah
Keyword(s):  
Financial Institutions ◽  
Financial Reporting ◽  
Business Models ◽  
Fair Value ◽  
Financial Instruments ◽  
Structured Interviews ◽  
Content Type ◽  
Reporting Framework ◽  
Islamic Financial Institutions ◽  
Ifrs 9

Purpose The purpose of this paper is to investigate the effects and challenges of the new amendment of International Financial Reporting Standards (IFRS) 9 in Malaysia from the perspectives of regulators, auditors, accountants and academicians in Malaysian Islamic financial institutions. For the purpose of this study, this paper focuses on the recognition criteria perspective of the standard, which provides a basic understanding of the financial reporting framework. Design/methodology/approach Using 10 series of semi-structured interviews undertaken with key individuals in regulatory bodies, audit companies, full-fledged Malaysian Islamic Banks and Malaysian higher learning institutions. Findings The findings revealed that IFRS 9 strengthens International Accounting Standards 39 in terms of relevance and reliability, recognition of financial instruments and identification of business models. Nevertheless, Islamic financial institutions face challenges in terms of a faithful representation of fair value, substance over form, identification of financial instruments before recognition criteria and the extent of the role of risk management in reducing manipulation in identifying business models. Research limitations/implications This study provides implications to regulators and standard setters in Malaysia to enhance the quality of financial reporting framework and practices in Islamic financial institutions in this country using IFRS 9. Practical implications Practically, the findings of this study can be used by the regulators to resolve the issues that arise in adopting IFRS 9 among Islamic financial institutions to further enhance financial reporting quality. Originality/value The findings of this study are very important to ensure that the adoption of IFRS among Islamic financial institutions are in line with Sharīʿah principles. To date, no studies have been done on the challenges of adopting IFRS 9 among Islamic financial institutions in Malaysia.

A proposed framework for implementing risk-based Shari’ah audit

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suleiman Dalhatu Sani ◽  
Mustapha Abubakar
Keyword(s):  
Financial Institutions ◽  
Real Life ◽  
Financial System ◽  
Practical Work ◽  
System Stability ◽  
Illustrative Case ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions

Purpose This paper aims to recommend a framework that serves as a practical work tool for conducting risk-based Shari’ah audit (RBSA) in Islamic financial institutions (IFIs). Design/methodology/approach Qualitative research method was used through critical in-depth content analysis of documented literature to generate deep insights, further supported with a hypothetical illustrative case study application of the framework on an Islamic bank, aimed at bringing the framework to a practical, near real-life scenario. Findings A robust RBSA framework has been developed which focuses on Shari’ah non-compliance risks to systematically and practically arrive at a rated opinion on the level of an IFI’s adherence with Shari’ah rules and principles as recommended by the Accounting and Auditing Organization for Islamic Financial Institutions, aimed to safeguard the IFI and promote financial system stability at large. Research limitations/implications Practical realities limited the study to the use of a hypothetical case study bank. Future researchers can apply the framework to a real case study of diverse IFIs for effective contextual recalibration in diverse jurisdictions. Practical implications This paper aids the development of both internal and external Shari’ah audit practice using the risk-based approach. Social implications The RBSA framework contributes to promoting public trust and confidence in the Islamic finance industry. Originality/value This paper has proposed this RBSA framework as a practical work tool for Shari’ah auditors in their engagements and regulators in promoting sound governance and financial system stability. It provides foundation for future researchers in the field.

Analysing the AAOIFI Sharīʿah standard on zakat

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Khurram Parvez Raja
Keyword(s):  
Financial Institutions ◽  
Islamic Law ◽  
Financial Statements ◽  
Insurance Companies ◽  
Single Individual ◽  
Content Type ◽  
Long Run ◽  
Islamic Financial Institutions ◽  
The Law ◽  
Islamic Insurance

Purpose The Sharīʿah Standard No. (35) issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) aims to identify the zakāt base for institutions (including Islamic insurance companies) as well as the subsidiary and the mother company of the institution (the company). By zakāt base, the standard means the items of financial statements that should or should not be included in the calculation of the zakāt base, and the liabilities or allocations that should or should not be deducted from zakatable assets. The standard also covers payable zakāt rates, disbursement of zakāt funds on the eight categories of zakāt recipients and the rulings pertaining to disbursement. The focus then is on companies or corporations. There is no indication in the aims as to who owns the wealth of the corporation, that is, whether it is the company itself or it is the shareholders and whether it is treated as a joint wealth of the shareholders or of a single individual in the form of the company. The author will rely on this issue as one factor on the basis of which the standard is to be judged. Design/methodology/approach Quran and hadith. Works of earlier jurists. Findings In this study, the author has summarized the provisions of zakāt according to the traditional law, but only those that are relevant for the financial institutions and the standard issued by the AAOIFI. After that, the author mentioned the major points that have been addressed by the standard. In the last section, the author has shown that the rulings of the Islamic Fiqh Academy and the AAOIFI on zakāt are totally confusing and merely a reproduction of the rulings of traditional law. The main reason for this confusion is that the nature and entity of a corporation have not been addressed and have been treated like a partnership, thus, jumbling up the entire issue of zakāt through banks. Originality/value The main purpose in undertaking this original work is to examine the AAOIFI Sharīʿah Standards from the perspective of traditional Islamic law, that is, the law of the senior schools as laid down in their authentic manuals. If there is an extensive deviation from this law, then this must be pointed out in the hope that it will be corrected by the concerned institution and the banks that adopt these standards. Neglecting such a corrective action for long will result in damage not only to these institutions in the long run but also to the law of Islam that has been so carefully crafted over centuries. The purpose is to show how far this standard deviates from traditional Islamic law and claims to be called the authentic view on a particular subject. Nevertheless, it is not the purpose of this work to explain and elaborate on the meaning and utility of these standards.

Are Islamic financial institutions more resilient against the COVID-19 pandemic in the GCC countries?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Erhan Akkas ◽  
Hazem Al Samman
Keyword(s):  
Saudi Arabia ◽  
Phase Analysis ◽  
Financial Institutions ◽  
Random Effect Model ◽  
Second Phase ◽  
Content Type ◽  
Gcc Countries ◽  
Effect Model ◽  
Islamic Financial Institutions ◽  
The Impact

Purpose This paper aims to investigate and provide an objective appraisal of the impact of the COVID-19 outbreak on Islamic and conventional financial institutions and Islamic windows in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The panel data techniques are conducted country-wise in each financial institution type: random-effect model, fixed-effect model and Hausman test. Findings The results of the first phase analysis that extends from 1 January 2020 to 30 October 2020 show that Islamic financial institutions are less exposed to the repercussions of the COVID-19 outbreak than the conventional and Islamic window financial institutions in Bahrain, Oman, Qatar, Saudi Arabia and UAE. Moreover, the Islamic financial institutions in Saudi Arabia and Oman have not been affected by the COVID-19 outbreak. The second phase analysis for the COVID-19 outbreak that extends from 1 November 2020 to 17 March 2021 confirms the disappearance of the negative impact of COVID-19 on Islamic financial institutions in Bahrain and Oman. Practical implications The findings present that Islamic banks are not as resilient in the COVID-19 pandemic as in the 2008 financial crisis. It can be suggested that regulatory authorities, financial institutions and other key policymakers in the GCC countries should focus on implementing regulatory reforms related to human capital, innovative products, research and development to further develop individuals, societies and institutions within the framework of Islamic ontology to be more resilient in such crises. Originality/value This paper provides a different perspective from existing literature on the pandemics and financial institutions by comparing the stock prices in Islamic and conventional financial institutions and Islamic windows in GCC countries during the COVID-19 pandemic. Therefore, this paper should be considered as a contribution to filling a gap in the literature.

scholarly journals The branding of religious financial institutions in the UK: conversations with market actors within the Islamic financial sector

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Seng Kiong Kok
Keyword(s):  
Financial Institutions ◽  
Qualitative Methodology ◽  
Far East ◽  
Financial Economic ◽  
Religious Institutions ◽  
Group Interactions ◽  
Islamic Theology ◽  
Content Type ◽  
Islamic Financial Institutions ◽  
The Uk

Purpose We are beginning to observe the growth of Islamic finance beyond the borders of traditionally Islamic markets such as the Middle East and the Far East. The proliferation of such religious financial institutions in non-Islamic and more secular markets has raised some pertinent questions about how these quasi-religious institutions brand themselves in light of the need to balance the conflation of Islamic theology with that of financial economic principles. Design/methodology/approach The study adopts a process-based qualitative methodology proceeded with an initial data reduction-theoretical conceptualization of the extant literature. This is followed by data display via quote research of participants’ precepts and concludes with a synthesis the extant academic conceptualizations with empirical perspectives. Findings The findings highlight a framework explaining the interface between Islamic and non-Islamic participation on the branding of Islamic financial institutions in the UK. The findings also set forth a need for consideration of non-religious and purely economic participation in the Islamic financial system in light of branding. Originality/value This study derives its incremental contribution by extending the extant academic literature on the branding and consumption of Islamic financial products and services within non-Islamic and secular markets. Furthermore, by adopting a multi-disciplinary, qualitative lens and engaging pertinent individuals within the field, the study provides a rich framework from which to explore the branding of these quasi-religious institutions and the interface between religious and non-religious consumption. This framework puts forth to the leaders of Islamic financial institutions of the between- and within-group interactions in terms of religio-financial consumption and branding.

scholarly journals Drivers of Ar-Rahnu (pawn) acceptance: Malaysian evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hassanudin Mohd Thas Thaker ◽  
Ahmad Khaliq ◽  
Mohamed Asmy Bin Mohd Thas Thaker ◽  
Anwar Bin Allah Pitchay ◽  
K. Chandra Sakaran
Keyword(s):  
Financial Institutions ◽  
Perceived Risk ◽  
Credit Card ◽  
Social Factor ◽  
Partial Least Square ◽  
The Body ◽  
Least Square ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Financial Institutions

Purpose The purpose of this paper is to examine the factor persuading the acceptance of Islamic pawn broking (Ar-Rahnu) among Islamic bank customers. Design/methodology/approach The authors collected the data using a self-administered questionnaire design and analysed using SPSS Statistics and smart partial least square. The study is restricted to only respondents who are based in the area of Klang Valley (Selangor and Kuala Lumpur), as these two areas have a larger number of Islamic banks and a decent number of Islamic banks’ clients. A total of 381 respondents’ responses are used for this study, and the constructs involved for analysis purpose are affect, social factor, facilitating conditions, perceived financial benefits and perceived risk constructs. Findings The finding suggests a significant positive association for social factor and perceived risk, while negative association learnt for affect on acceptance of Ar-Rahnu financing. On the same note, the facilitating condition and perceived financial benefit are found insignificantly related. Practical implications The findings generated from this study are expected to enrich the literature on the body of knowledge, as it has served to broaden the understanding of the Ar-Rahnu acceptance level in Malaysia. As mentioned, there is limited literature available using this type of financing. Existing studies focus too much on conventional financing products such as personal financing, credit card, short-term loan and many others. Less attention is given to Ar-Rahnu financing. Thus, this study expected to add value to the literature available in the context of Islamic pawn broking business. Moreover, the findings of this study will be very helpful for the Islamic financial institutions to find the best way to retain Ar-Rahnu clients and encourage more client to choose Ar-Rahnu as a mode of financing. Originality/value This study owns greater potential to assist Islamic financial institutions to discover the best techniques to retain and encourage the grander number of clients for Ar-Rahnu as a mode of financing.

Corporate governance and compliance with AAOIFI governance standards by Islamic banks

2020 ◽  
Vol 13 (5) ◽  
pp. 891-918
Author(s):  
Yosra Mnif ◽  
Marwa Tahari
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Audit Committee ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Disclosure Requirements ◽  
Financial Expertise ◽  
Islamic Financial Institutions ◽  
Research Stage

Purpose This study aims to examine the effect of the main corporate governance characteristics on compliance with accounting and auditing organisation for Islamic financial institutions’ (AAOIFI) governance standards’ (GSs) disclosure requirements by Islamic banks (IB) that adopt AAOIFIs’ standards in Bahrain, Qatar, Jordan, Oman, Syria, Sudan, Palestine and Yemen. Design/methodology/approach The sample consists of 486 bank-year observations from 2009 to 2017. Findings The findings reveal that compliance with AAOIFIs’ GSs’ disclosure requirements is positively influenced by the audit committee (AC) independence, AC’s accounting and financial expertise and industry expertise, auditor industry specialisation, IB’s size and IB’s listing status. On the other hand, it is negatively influenced by the ownership concentration. Research limitations/implications This study has only examined compliance with AAOIFI’s GSs’ disclosure requirements and has focussed on one major sector of the Islamic financial institutions (which is IB). Practical implications The findings are useful for various groups of preparers and users of IBs’ annual reports such as academics and researchers, accountants, management of IBs and some organisations. Originality/value While the study of the AAOIFIs’ standards has grown contemporary with considerable contributions from scholars, however, the majority of these studies are descriptive in nature. Indeed, the existing literature that has explored the determinants of compliance with AAOIFI’s standards is in the early research stage. To the best of the knowledge, there is a paucity of empirical research testing this issue.

The impact of internal and external market orientation on the performance of non-conventional Islamic financial institutions

2018 ◽  
Vol 9 (1) ◽  
pp. 132-151 ◽  
Author(s):  
Mostaque Ahmed Zebal
Keyword(s):  
Market Orientation ◽  
Financial Institutions ◽  
Significant Relationship ◽  
Structural Equation ◽  
Discriminant Validity ◽  
Equation Modeling ◽  
External Market ◽  
Content Type ◽  
Islamic Financial Institutions ◽  
The Impact

Purpose The purpose of this study was to explore the impact of internal and external market orientations on monetary and non-monetary performances of non-conventional Islamic financial institutions. This study further aimed at proposing a conceptual framework, testing it and examining relationships among the variables. Design/methodology/approach Data for this study were collected from 132 branches of 11 non-conventional financial institutions in Bangladesh using a closed-ended questionnaire. The study considered a structural equation modeling approach for testing the proposed model. A two-step procedure was used for this purpose. First, a measurement model was analyzed through a confirmatory factor analysis; second, the structured model was evaluated to examine relationships between the constructs. Data used in this study confirmed the adequate reliability, convergent and discriminant validity. Findings The results of the study met the expectations and provided an evidence that both monetary and non-monetary business performances are functions of internal and external market orientations’ efforts. As the results are reported, all three components of internal market orientation, e.g. internal intelligence generation, dissemination and responsiveness, were found to be statistically significant and positively related to monetary and non-monetary performances, except internal intelligence responsiveness with employees’ team spirits. The study also revealed a significant relationship between all three external market orientation components, and business performance, except external intelligence responsiveness, was not found to have a significant relationship with team spirit and customer retention. The results, however, imply that the performance of non-conventional financial institutions is an integrated effort of both internal and external orientations rather than using a single approach. Originality/value Findings of this study support the theoretical arguments that non-conventional financial institutions can be successful in attaining all types of performances by initiating and adopting internal and external market-oriented activities. The study further argues the importance of the activities under each market orientation component and suggests non-conventional financial institutions to promote such an initiative if they are to be consistent in their performances.

The need of accounting standards for Islamic financial institutions: evidence from AAOIFI

2013 ◽  
Vol 4 (1) ◽  
pp. 64-76 ◽  
Author(s):  
Adel Mohammed Sarea ◽  
Mustafa Mohd Hanefah
Keyword(s):  
Financial Institutions ◽  
Accounting Standards ◽  
Future Research ◽  
Content Type ◽  
Accounting Practice ◽  
Muslim Countries ◽  
Level Measurement ◽  
Compliance Level ◽  
Islamic Financial Institutions ◽  
Heated Debate

PurposeThe purpose of this paper is to determine the need of Islamic Accounting Standards – a review of the literature – for Islamic financial institutions (IFIs).Design/methodology/approachThe basis of the paper was stakeholder theory to analyse the need of accounting standards and to design the conceptual framework as evidenced from Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The evidence reviewed suggests the need for Islamic accounting standards to fill the gap in accounting practice among Islamic financial institutions.FindingsThe AAOIFI accounting standards serve as a guideline that may reflect the unique characteristics of IFIs and become a useful tool to meet the various needs of IFIs. Currently, one of the major challenges facing IFIs lies in the preparation of the financial statements under different accounting standards and which may lead to problems of comparability, reliability and compliance level measurement. This has resulted in a heated debate among scholars which has hitherto translated to the evolving existing literature surrounding the interpretation of the level of compliance with the Islamic accounting standards. The paper concludes with various recommendations for future research, the most important of which is the need for future studies on how AAOIFI accounting standards can be made mandatory in all Muslim countries.Originality/valueThis paper contributes towards a better understanding and acceptability of the need of Islamic Accounting Standards.

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