A comparative analysis of employees’ and customers’ attitude towards Islamic banking

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Syed Ahmad Ali ◽  
Aida Loussaief ◽  
Muhammad Ahmed
Keyword(s):  
Design Methodology ◽  
Global Market ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Strategic Positioning ◽  
Content Type ◽  
The Past ◽  
Comparative Examination ◽  
Insight Into

Purpose Islamic banking industry with all of its exponential growth and global recognition has been under criticism for the past two decades. However, the problem signifies further when such criticism is made from within the organization and is well supported by outside (the customers). The purpose of this study is to provide a coherent exploration to investigate the factors that polarize its employees and customers across many parts of the world. Design/methodology/approach To investigate the phenomenon, a total of 30 responses were taken through interviews 15 each from customers and employees. Afterwards, the data was analysed and summarized into two categories. In doing so, the top five Malaysia’s Islamic banks were shortlisted to collect data from employees and customers. Findings A detailed thematic analysis resulted in six themes (Contradiction between theory and practice, Islamic banking knowledge and awareness, inadequate Shariah training, employees’ background, Shariah compliance, Islamic banking benefits) for employees and five (Islamic banking benefits, applying Shariah in Islamic banking, knowledge of Islamic banking, Islamic banking promotion, Islamic banking employees’ behaviour) for customers, respectively. Research limitations/implications The results have stronger implications for both practice and theory as organizations can assess stakeholders and their perceptions about Islamic banking. Another implication is the comparative examination of employees and customers which can potentially affect decision and policy making in Islamic banks. Islamic banks can also address employment-related issues related to employees’ behaviour vis-à-vis marketing-related problems faced by its customers that will ultimately improve its global market share and strategic positioning. Originality/value The study is based on the importance of Islamic banking in Malaysia and explores the factors that potentially create a positive or negative insight into Islamic banking – both in employees and customers.

House financing: contracts used by Islamic banks for finished properties in Malaysia

2020 ◽  
Vol 11 (1) ◽  
pp. 168-178 ◽  
Author(s):  
Aishath Muneeza ◽  
Muhammad Fahmi Fauzi ◽  
Muhammad Faisal Bin Mat Nor ◽  
Mohamed Abideen ◽  
Muhammed Maher Ajroudi
Keyword(s):  
Research Finding ◽  
Design Methodology ◽  
Banking Industry ◽  
New Products ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Modus Operandi ◽  
Content Type ◽  
Secondary Sources ◽  
Insight Into

Purpose The purpose of this paper is to find out the existing practices of the Islamic banks in providing financing to the customers who have a requirement to purchase a finished property and to examine the existing products used by the Islamic banks in this regard by providing an insight into the modus operandi of these products. In doing this, attempt is made to find out the most famous product offered by the Islamic banks in this regard and to find out whether in reality, Malaysian Islamic banking industry has moved away from Bai Bithaman Ajil (BBA) or not. Design/methodology/approach This is a qualitative research, largely library-based, and it will consist of secondary sources such as books, journals, articles and other sources related to the Islamic house financing in Malaysia for finished properties. Recent information of the practises of the banks in this regard is obtained from the official websites of the banks. Findings It is found from this study that majority of Islamic Banks in Malaysia prefer to use the Commodity Murabahah facility for finished property. This finding contradicts with the observations made by some scholars who state that in Malaysia, BBA was initially used, and nowadays, the use of Musharakah Mutanaqisah is more common. The reason why Commodity Murbahah has gained popularity is because of the fact that via the Bursa Suq Al Sila platform, it is easy, swift, reliable, profitable, cheaper, convenient and has zero risk to do this type of transaction at the comfort of the office. It is recommended in this paper to use Musharakah Mutanaqisah, as this contract is an innovative contract that is classified as an equity contract under shariah where risk is shared between the parties. There is need to conduct further research to implement Musharakah Mutanaqisah in Malaysia, specifically to reduce the risk that Islamic Banks will bear by practicing this contract. Originality/value The findings of this paper might create confusion among readers, as some may perceive that the finding of the paper is not new as BBA has been dominating Islamic house financing industry from the inception of Islamic banking in the country, and BBA and Murabahah are similar in nature, and as such, commodity Murabahah is also a Murabahah transaction. The reality that needs to be understood is that the way BBA was or is practised in Malaysia in relation to Islamic house financing is that in the name of BBA, the transaction actually followed the Bai’ ‘inah contract, which is a controversial contract among the shariah scholars. Likewise, commodity Murabahah is also a different contract than Murabahah, as it actually refers to tawarruq. As such, this research finding is important to the Islamic banking industry to understand that Malaysia has moved away from the Bai’ ‘inah contract practised in the name of BBA in Islamic house financing, and there are new products introduced by the Islamic banks in Malaysia to replace this practice which were criticised by Shariah scholars.

Index for measuring convergence between objectives and practice of Islamic banking

2021 ◽  
Vol 14 (2) ◽  
pp. 205-229
Author(s):  
Zahid Siddique
Keyword(s):  
Design Methodology ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Mathematical Form ◽  
Islamic Banks ◽  
Content Type ◽  
Loan System ◽  
Additive Form ◽  
Practical Implications ◽  
Over Time

Purpose Islamic banking was developed to serve two objectives: to replace interest-based loan system with profit and loss sharing investment modes and to promote equity in resource allocation. The first objective is called procedural whereas the second one is termed consequential. Scholars have been debating about the success of Islamic banking in achieving these objectives. This paper aims to develop an index for measuring the extent of convergence between theory and practice of Islamic banking. Design/methodology/approach For measuring the procedural and consequential convergence between objectives and practice of Islamic banking, the paper derives a set of indicators from the celebrated theory of Islamic banking and then develops the methodology of ranking all banks in terms of those indicators. Findings The paper provides ranking of Islamic banks in Pakistan in the light of this index. The results indicate that none of the Islamic banks in Pakistan has been doing good enough to achieve the convergence, instead they are moving in the opposite direction over time. Practical implications Using the methodology developed in this paper, universal ranking of Islamic banks may be issued every year. Originality/value Scholars have proposed some indices for measuring the performance of Islamic banking. There are two basic problems with these proposed measures: they do not directly compare the performance of Islamic banking against its stated objectives and they naively use an additive form of index without explaining the reason for this choice, i.e. as to what are the desirable characteristics which their preferred mathematical form of index serves. The index proposed in this paper attempts to overcome these shortcomings.

Are Islamic banks different? The application of the Radical Affinity Index

2019 ◽  
Vol 12 (1) ◽  
pp. 2-29 ◽  
Author(s):  
Leire San-Jose ◽  
Jon Cuesta
Keyword(s):  
Great Britain ◽  
Design Methodology ◽  
Islamic Banking ◽  
Ethical Dimension ◽  
Islamic Banks ◽  
Ethical Perspective ◽  
Content Type ◽  
Social Commitment ◽  
Practical Implications ◽  
Ethical View

Purpose The purpose of this paper is to extend the literature on Islamic banking by examining their ethical dimension using transparency, placement of assets, guarantees and participation from Radical Affinity Index. Design/methodology/approach To this end, a sample of 20 Islamic banks from 13 countries (Bahrain, Saudi Arabia, Malaysia, Pakistan, Kuwait, Tanzania, Great Britain, Oman, Iraq, Egypt, Bangladesh and Qatar) was used. Findings The results are robust to ethical effects. The evidence suggests that among Islamic banks, at least some of them could improve their ethical requirements of the Sharia; they obtained lower scores than ethical banks in terms of RAI variables (transparency, placement of assets, guarantees and participation). Research limitations/implications It is used a random sample rather than population with the limitations that entails. The variables in the index are based on ethical perspective; then, the index is applied in Islamic banking but with the ethical view limitation. Practical implications The Islamic banks have the option to increase their transparency including further information regarding the beneficiaries of the benevolent funds; moreover, it would offer a clearer view about their ethical and social commitment towards society. Originality/value Additionally, this paper broadens the scope of the literature by analysing the determinants of Islamic banking around ethical dimensions of financial entities.

Measuring Shariah non-compliance risk (SNCR): claw-out effect of al-bai-bithaman ajil in default

2017 ◽  
Vol 8 (3) ◽  
pp. 272-283
Author(s):  
Saiful Azhar Rosly ◽  
Muhammad Arzim Naim ◽  
Ahcene Lahsasna
Keyword(s):  
Content Analysis ◽  
Design Methodology ◽  
Islamic Banking ◽  
Legal Environment ◽  
Islamic Banks ◽  
Legal Cases ◽  
Content Type ◽  
Potential Loss ◽  
Critical Requirement ◽  
Practical Implications

Purpose The purpose of this paper is to examine the meaning, nature and measurement of Shariah non-compliant risk faced by Islamic banks. Design/methodology/approach Al-bai-bithaman ajil (BBA) contract documentation is analyzed in the light of the legal environment in Malaysia and measurement of Shariah non-compliant risk based on constructed or hypothetical cases. Findings Shariah non-compliant risk will adversely affect bank’s earnings when BBA contracts are deemed invalid in the court of law, either in a foreclosure or ruling via court declaration. Research limitations/implications The paper is written based on content analysis, Malaysian legal cases with hypothetical examples for better understanding. Practical implications Islamic banking should be able to use the findings to estimate potential loss from Shariah non-compliant risk and make the necessary provisions. Originality/value This paper provides new insights of risks faced by credit-intensive Islamic banks, that when relinquishing critical requirement of Islamic contract such as ownership risk will suffer loss.

Shari’ah issues in Islamic banking: a qualitative survey in Malaysia

2014 ◽  
Vol 6 (2) ◽  
pp. 198-210 ◽  
Author(s):  
Abdelghani Echchabi ◽  
Hassanuddeen Abd. Aziz
Keyword(s):  
Design Methodology ◽  
Structured Interview ◽  
Point Of View ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Research Approach ◽  
Islamic Banks ◽  
Content Type ◽  
Qualitative Survey ◽  
Customers Perspective

Purpose – The purpose of this paper is to examine the customers’ perception regarding the current shari’ah issues of Islamic banks in Malaysia. Specifically, the study attempts to examine the awareness of the current criticisms of the main shari’ah issues in Islamic finance, and the perception of the selected customers towards these criticisms. Design/methodology/approach – The study uses a qualitative approach to understand in detail the customers’ perception and experiences about shari’ah compliance of Islamic banks. Semi-structured interview is used with ten Islamic banks’ customers in Malaysia. The study also used phenomenological techniques to analyse the data. Findings – The findings revealed that the interviewees have considerable exposure and awareness of the current criticisms of the shari’ah compliance of Islamic banks. Originality/value – This research is the first to study the shari’ah issues of Islamic banks in Malaysia from the customers’ perspective, by using a qualitative research approach. The findings of this study are of original importance, because they unveil the customers’ experience in an area that has been severely looked at from the professional and experts’ point of view only.

Factors that influenced the adoption of IFRS by Islamic banks in the UAE

2020 ◽  
Vol 33 (1) ◽  
pp. 75-91 ◽  
Author(s):  
Mohammad Haroun Sharairi
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Accounting Standards ◽  
Adoption Process ◽  
Islamic Banking ◽  
Reporting Standards ◽  
Islamic Banks ◽  
Content Type ◽  
Financial Reporting Standards ◽  
The Relationship

Purpose This paper aims to investigate the factors that influenced the current adoption of the international financial reporting standards (IFRS) by Islamic banks in the UAE. This paper examined the relationship between the theoretical aspects and practical components of the research investigation regarding the factors that influence the adoption of IFRS. This paper will contribute to the existing knowledge and practices in not only Islamic countries but also Western countries in terms of a deeper understanding of the adoption of IFRS by the Islamic banks and how the factors could influence the Islamic banking adoption, process, activities and financial reporting. Design/methodology/approach Several theories of regulation were considered in this paper to explain the existence of Islamic accounting regulations and understand why some of the Islamic accounting prescriptions became formal regulations, while others did not. Data was collected for this purpose by conducting a survey with professionals and managers of four Islamic banks in the UAE. Findings This paper revealed that factors, such as religion, culture and local investors, may have limited influence on the current adoption of accounting standards in the Islamic banks. Furthermore, this paper uncovered a concern among respondents of issues that developed when Islamic banks commenced the adoption of IFRS. This paper also indicated that respondents’ opinion does not reflect a perception that all IFRS are suitable for the application of Shariah transactions. Originality/value This study is unique as no study has yet explored the factors that influenced the adoption of the IFRS by Islamic banks in the UAE.

scholarly journals The internal challenges facing Islamic finance industry

2016 ◽  
Vol 9 (2) ◽  
pp. 222-235 ◽  
Author(s):  
Abdulazeem Abozaid
Keyword(s):  
Product Development ◽  
Design Methodology ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking And Finance ◽  
Finance Industry ◽  
Development Methodology ◽  
Shariah Governance

Purpose The paper aims to highlight the challenges facing Islamic finance industry and outline the prospectus of what constitutes a sound Islamic banking product in terms of both its Shariah control and product development methodology. Design/methodology/approach The paper analytically addresses the internal challenges facing Islamic finance industry by highlighting, first, the deficiencies in the existing Shariah supervisory work and, then, the deficiencies in the product development methodology followed in Islamic banks. Findings Islamic banking and finance is facing some internal challenges which require immediate action. Although facing the external challenges may be beyond the capacity of the industry players, Islamic banks have no excuse to overlook or turn a blind eye to their internal challenges which can be overcome by enacting Shariah governance for both products and Shariah control and reforming the methodology of product development. Originality/value This paper highlights an issue that has not received the needed attention, and it proposes the necessary solutions to the problems it identifies.

Bridging the gap: from service user to service provider

2020 ◽  
Vol 24 (3) ◽  
pp. 157-162
Author(s):  
Maddi Faith
Keyword(s):  
Service Provider ◽  
Service User ◽  
Design Methodology ◽  
First Person ◽  
Service Users ◽  
Content Type ◽  
The Past ◽  
Personal Experiences ◽  
Insight Into

Purpose The purpose of this paper is to share the author’s personal experiences as both a service user for the past 10 years and becoming a professional working in the same field. This paper aims to provide an insight into some of the barriers faced relating to support and procedures, as well as provide advice and guidance to service users and professionals. Design/methodology/approach This paper is designed primarily as a narrative; a first-person approach is taken. Findings Advice and reflections for service users is given as well as guidance for professionals. Originality/value This paper is a narrative of an individual’s personal experiences and observations therefore providing a unique outlook. This paper contributes to both service users who may feel unsure about or overwhelmed by their treatment and their involvement in decisions, as well as professionals trying to develop their understanding and awareness of less thought about needs for autonomy for service users and improving their practice.

Big Macs and a three-legged stool

2014 ◽  
Vol 30 (5) ◽  
pp. 25-27
Keyword(s):  
Case Studies ◽  
Design Methodology ◽  
Reading Time ◽  
Content Type ◽  
The Past ◽  
Internationalization Strategy ◽  
Pertinent Information ◽  
Practical Implications ◽  
Insight Into

Purpose – This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach – This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings – The case study and interview offers a unique insight into factors contributing to McDonald’s unprecedented success (it has paid an increased dividend for the past 37 years). It also sheds light on its successful internationalization strategy. Practical implications – The paper provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Originality/value – The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

The evaluation of core competencies in networks: the network competence report

2017 ◽  
Vol 18 (1) ◽  
pp. 189-216 ◽  
Author(s):  
Francesca Francioli ◽  
Massimo Albanese
Keyword(s):  
Intellectual Capital ◽  
Design Methodology ◽  
Core Competencies ◽  
Theory And Practice ◽  
Structured Interviews ◽  
Content Type ◽  
Proposed Model ◽  
Network Competence ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this paper is to propose a model to disclose, report, and manage intellectual capital (IC) in a network of companies. To this end, it provides a monetary evaluation of core competencies (CCs), which may be defined as a bundle of various types of intangibles, aggregating their value into a network statement, called a network competence report (NCR). Design/methodology/approach The paper utilises the interventionist approach. The intervention was conducted by the authors and studied through joint reflections on documentation from meetings and individual, semi-structured interviews. Findings The NCR makes IC more transparent, thereby allowing companies and network managers to assess the strengths and weaknesses of CCs with a consequent potential insight into their potential earnings. Research limitations/implications This method is labour-intensive, especially in its first application, and the data collection requires considerable company involvement. The interventionist approach may have influenced the empirical results, which may be affected by subjectivity. As the paper involves a single network, care should be taken in generalising its empirical evidence. Practical implications In making IC management more effective, the NCR is valuable for academics, management, political authorities and, more generally, for a network’s stakeholders. The NCR is a tool for internal and external communication purposes, creating the conditions to mobilise IC. The proposed model supports the diagnosis of networks by providing CC maps and assessments relevant to their governance and competitiveness. The NCR depicts company and network CCs, allowing intertemporal comparisons that facilitate understanding of the effectiveness of the network’s actions and the importance of belonging to it. Originality/value This paper represents a first attempt to evaluate, in monetary terms, CCs in a network. Its value lies in its practical implications. Moreover, the paper investigates IC in applied terms, contributing to reducing the gap between theory and practice.

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