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.

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.

Just how loyal are Islamic banking customers?

2018 ◽  
Vol 36 (3) ◽  
pp. 410-422 ◽  
Author(s):  
John J. Ireland
Keyword(s):  
Conjoint Analysis ◽  
Design Methodology ◽  
Price Sensitivity ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Market Simulation ◽  
Conventional Banks ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to determine the rate difference required to persuade Islamic banking customers to switch to conventional banks. Design/methodology/approach A choice-based conjoint analysis survey was administered to 300 UAE Islamic banking customers. Customer utilities for Islamic and conventional banks, products and prices were developed to test hypotheses while a market simulation estimated the impact of rate changes on choice shares. Findings Overall, Muslim customers of Islamic banks strongly preferred Islamic banks and products. However, 43 percent were willing to switch to conventional banks to obtain better rates. Indeed, the share choosing conventional banks rose from 25 percent when rates were the same to 68 percent when conventional products offered 2 percent better rates. Research limitations/implications This research requires replication and extension in appropriate contexts such as Malaysia and Indonesia. Moreover, the existence of price sensitivity tiers implies underlying benefit segments that should be studied. Practical implications As so many Islamic banking customers would switch to conventional banks for better rates, it seems that conventional banks compete with Islamic banks for most clients. Islamic banks should price accordingly. Originality/value This is the first study to quantify the loyalty of Islamic banking customers in terms of price and, consequently, the first to demonstrate the existence of price sensitivity tiers. It is also the first in this field to apply conjoint analysis and market modeling.

Exploring the “social failures” of Islamic banks: a historical dialectics analysis

2017 ◽  
Vol 8 (3) ◽  
pp. 250-271 ◽  
Author(s):  
Zayyad Abdul-Baki ◽  
Ahmad Bukola Uthman
Keyword(s):  
Design Methodology ◽  
Banking System ◽  
Profit Maximization ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Muslim Population ◽  
Content Type ◽  
The Social ◽  
Dialectical Analysis ◽  
Practical Implications

Purpose This paper aims to argue that the current environment in which the Islamic banking system is situated is not ideal for the system’s pursuance of its socioeconomic ideals, thus necessitating the system’s shift from pursuing falah to maximizing profits. Design/methodology/approach The paper theorizes and conceptualizes this shift from falah to profit maximization using two complementary theories – systems theory and institutional theory – to prove that such a shift is not unexpected. The paper further adopts a dialectical analysis that is somewhat historical to analyse the shift. Findings The measure of the Islamic banks’ performance in terms of their social ideals is misplaced, as the environment in which they currently operate does not support such goals. Thus, stemming from the theoretical base, the Islamic banks’ pursuance of profit maximization instead of falah should not be unexpected. The paper concludes that despite the unfavorable environment, the social ideals of the Islamic banking system may still be met, to an extent, through investment in microfinance and awqaf. Research limitations/implications The paper adopts document analysis for sourcing data majorly from prior studies. Hence, the authors do not conclude that the analysis herein is applicable to all Islamic banks. Secondly, as the authors could not get a complete historical account of the Islamic banking system’s development, some aspects of the dialectical analysis – contradiction and change – have been discussed in a general fashion. Practical implications The need for Islamic banks in the current environment, especially for the Muslim population, cannot be over emphasized; however, the achievement of falah given this current environment may be daunting. Originality/value The current analyses of the shift of Islamic banks from pursuing falah to pursuing profit maximization are not well-defined, as they lack a proper theorization of the challenges faced by Islamic banks. This paper fills this gap.

scholarly journals Knowledge representation for missing persons investigations

2017 ◽  
Vol 19 (1/2) ◽  
pp. 138-150
Author(s):  
Mark Taylor ◽  
Denis Reilly
Keyword(s):  
Knowledge Representation ◽  
Design Methodology ◽  
Situation Calculus ◽  
Content Type ◽  
Missing Persons ◽  
State Changes ◽  
Changes Over Time ◽  
Investigation Process ◽  
Practical Implications ◽  
Over Time

Purpose This paper aims to present the application of situation calculus for knowledge representation in missing persons investigations. Design/methodology/approach The development of a knowledge representation model for the missing persons investigation process based upon situation calculus, with a demonstration of the use of the model for a missing persons example case. Findings Situation calculus is valuable for knowledge representation for missing persons investigations, as such investigations have state changes over time, and due to the complexity of the differing investigation activities applicable to different situations, can be difficult to represent using simpler approaches such as tables or flowcharts. Research limitations/implications Situation calculus modelling for missing persons investigations adds formalism to the process beyond that which can be afforded by the current use of text, tables or flowcharts. The additional formalism is useful in dealing with the uncertainty present in such investigations. Practical implications The implications are a simplification of the application of the current police guidelines, and thoroughness in the application of such guidelines for missing persons investigations via situation calculus modelling. Social implications This paper supports the management of missing person investigations, by using the most critical variables in a missing persons investigation to determine relevant investigation and search activities applicable to the circumstances of a given case. Originality/value The novelty of the knowledge representation approach is the application of situation calculus via state and action vectors and a matrix of fluents to the process of missing persons investigations.

Framing the development and directions of business sustainability efforts

2016 ◽  
Vol 16 (4) ◽  
pp. 709-725 ◽  
Author(s):  
Nils M. Høgevold ◽  
Göran Svensson
Keyword(s):  
Qualitative Study ◽  
Design Methodology ◽  
Business Networks ◽  
Convenience Sample ◽  
Content Type ◽  
Business Sustainability ◽  
The Status ◽  
Practical Implications ◽  
Over Time

Purpose The purpose of this paper is to frame the development and directions of business sustainability efforts. Design/methodology/approach A qualitative study was undertaken with respect to a convenience sample of reputable companies in Norway, which have implemented significant business sustainability efforts within their organisations, their business networks, the marketplace and in the society, beyond the level of mere compliance. Findings Different directions are associated with the development of corporate efforts in connection with business sustainability. Business sustainability efforts are not static, but dynamic and based upon continuous flexibility to changes and adaptations over time. Research Limitations/implications The current study highlights the need for further research into the development and directions of corporate efforts in connection with business sustainability in the marketplace and society. A key suggestion for further research is to further explore the existence of other directions. Practical Implications The directions reported, provide a framework to assess the development or the status of companies’ business sustainability efforts in the marketplace and society. Corporate efforts in connection with business sustainability develop over time as experiences are gained and personal impressions move the identified directions forward. Originality/value This study contributes to seven interconnected directions of corporate efforts in connection with business sustainability that are both relevant and potentially fruitful to both scholars and practitioners.

Initiating, challenging and improving knowledge in organizational contexts

2018 ◽  
Vol 41 (3) ◽  
pp. 278-295 ◽  
Author(s):  
Stefania Mariano
Keyword(s):  
Design Methodology ◽  
Organizational Knowledge ◽  
Current Debate ◽  
Improve Performance ◽  
Content Type ◽  
Organizational Contexts ◽  
Managerial Practices ◽  
Practical Implications ◽  
Over Time

Purpose The purpose of this study is to investigate how organizational knowledge interacts with artifacts and what determinants, driving processes and outcomes govern these interactions in organizational contexts. Design/methodology/approach A case study is used and data collected is from a US engineering and consulting company. Findings Findings suggested three major driving processes specifically initiating, challenging and improving and several related determinants and outcomes that governed the interaction between organizational knowledge and artifacts over time. Research limitations/implications This study has limitations related to the nature and dimension of the case selected. Practical implications This study provides a means to explain how organizations hold existing knowledge and what determinants, driving processes and outcomes govern the interactions between knowledge and artifacts to assist managerial practices and improve performance. Originality/value This paper contributes to the current debate on organizational knowledge and provides some empirical evidence of how knowledge interacts with artifacts in organizational contexts.

Paying a premium for an accounting crime

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lita – Dharmayuni ◽  
Lita – Dharmayuni
Keyword(s):  
Design Methodology ◽  
Third Parties ◽  
Literature Study ◽  
Content Type ◽  
Future Studies ◽  
The Public ◽  
Law And Legislation ◽  
Accounting Reports ◽  
Practical Implications ◽  
Over Time

Purpose This study aims to look at how the intention of a person when facing a dilemma to choose a good outcome (utilitarian) or a good and ethical process regardless of the outcome (deontological) by raising the case of PT. Asuransi Jiwasraya (Jiwasraya). Design/methodology/approach This study was conducted using a literature study method where researchers will analyze through previous research and news related to ethics, psychology and Jiwasraya cases. Findings In the Jiwasraya case, it can be said that the deontology principle has been violated, but the utilitarian principle also cannot provide benefits to the parties who should benefit, namely, the premium payers and the owners of third parties funds. In terms of intentions, at first, Jiwasraya’s management may intend to save and provide benefits to customers and the public who deposit funds at Jiwasraya (utilitarian principle). However, over time, managers choose to “allow” conditions to occur and even begin to engage in activities to take advantage of certain parties and groups by taking policies that are not by the rules (violating deontological principles) for personal gain. Research limitations/implications This study only discusses the Jiwasraya case through financial and accounting reports. Future studies can continue this research by looking at the Jiwasraya case through the law and legislation to obtain a complete picture. Practical implications With this research, it is hoped that the authors can better understand that the dilemma the author faces is rooted in the limitations of the abilities as humans; the ethics will influence all intentions for the choices the authors make. Originality/value This research uses case studies that occurred in Indonesia, the discussion is carried out using a utilitarian and deontological approach that has never been discussed regarding the Jiwasraya case before.

Value- based Islamic banking and reporting in Bahrain

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Akhtar Ali Saeed Mohammed ◽  
Fadillah Mansor
Keyword(s):  
Annual Reports ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Reporting Standard ◽  
Content Type ◽  
Islamic Financial Institutions ◽  
Islamic Economic ◽  
Practical Implications ◽  
Specific Contribution

Purpose This paper aims to analyse whether the practices of Islamic banks in Bahrain are in line with value-based Islamic banking (VBIB) and reporting disclosure in the annual reports towards achieving their fundamental objectives of human-centred economic development and social justice. Design/methodology/approach Based on Islamic finance, Islamic economic principles and perception of Maqasid al-Shari’ah, this paper examines and assesses the current practices of Islamic financial institutions (IFIs) in Bahrain through content analysis of financial and annual reports of Islamic banks in Bahrain and interviews of Islamic banking experts. Findings The findings reveal that value-based banking (VBB) has not been translated fully into practice by the Islamic banks in Bahrain. Research limitations/implications The data analysis was restricted to Islamic banks in Bahrain. Practical implications This paper identifies the need for reporting standard development to improve the VBB practice in Bahrain in the future. Looking at the objectives of the IFIs, this paper introduces the concept of VBB in Bahrain, which includes ethical banking, responsible banking and social responsibility. The study adds value not only to the current Islamic finance literature but also helps many stakeholders, including prospective academics, who may conduct comparative studies in different jurisdictions throughout the world. Originality/value The specific contribution of this paper is the identification of the VBB practices and related disclosure in the Islamic banking industry in Bahrain. The study is useful to harmonise and standardise the practices of VBIB by the contemporary Islamic banks in Bahrain.

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