Multiple Sharia' board directorship: a Maslahah (public interest) perspective

2019 ◽  
Vol 11 (3) ◽  
pp. 745-764 ◽  
Author(s):  
Abd Hakim Abd Razak
Keyword(s):  
Corporate Governance ◽  
Public Interest ◽  
Research Method ◽  
Design Methodology ◽  
Banking Industry ◽  
Islamic Banking ◽  
Content Type ◽  
Governance Framework ◽  
Cautious Approach ◽  
Specific Focus

Purpose The purpose of this study is to examine the legal paradigm of multiple Sharia' board directorship practice from the Sharia' law concept of Maslahah Al-Mursalah (public interest). Design/methodology/approach It uses a doctrinal research method that relies on the commonly referred sources of Quran and Sunnah, with a specific focus on Maslahah Al-Mursalah and, where applicable, commentaries by contemporary scholars, academics and practitioners as well as translations of classical book of Fiqh. This study scrutinises the polarity of views concerning the distinct Masyaqqah (necessity) surrounding the practice in discussion: the Masyaqqah that encourages and one that discourages the application of the practice. Findings This study is keen to suggest the industry to adopt a cautious approach and consider exploring a corporate governance framework that appraises the theoretical and practical Sharia' issues concerning its application in cognisance of its adversarial influence towards the sustainability of Islamic banking industry. Originality/value Since Murat Unal’s study of multiple Sharia' board directorships in 2009 and 2011, empirical works that scrutinise the practice from the Sharia' law perspective have remained limited or almost non-existent. It is aspired that this study may assist fellow readers and future researchers alike in evaluating and appreciating the divergent views surrounding the application of this practice in Islamic banking.

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.

Islamic banking selection criteria: a multi-ethnic perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Noradilah Abdul Hadi ◽  
Mohd Rizal Muwazir
Keyword(s):  
Design Methodology ◽  
Banking Industry ◽  
Descriptive Analysis ◽  
Banking System ◽  
Marketing Strategies ◽  
Islamic Banking ◽  
Content Type ◽  
Selection Factors ◽  
The Relationship ◽  
Further Development

Purpose The purpose of this paper is to examine selection factors among multi-ethnic customers in Malaysian Islamic banking industry. The information is important to reinforce the argument that ethnicity could become significant factor in determining customer behaviour. Design/methodology/approach This study uses quantitative approach by using questionnaire (Likert scale) to measure respondents ranking of 25 selection factors. A total of 272 valid responses were generated from 450 questionnaires distributed, with 60.4% response rate. The methods of analysis used are descriptive analysis, factor analysis and Kruskal–Wallis test. Findings The findings revealed five selection factors (religious and ethical, services and convenience, service quality and benefit, external and operational and charges), with religious and ethical factor as the most important criteria for Malay customers. As for Chinese and Indian customers, they chose services and convenience factor. Originality/value This study is conducted to gain new insights on the perception of multi-ethnic banking customers in Malaysia towards Islamic banks and how cultural differences might affect their decisions. The findings are important for further development of the Islamic banking industry in Malaysia considering ethnicity has a major impact on the society. The acknowledgement of similarities and differences between the ethnic groups could strengthen the relationship with the Islamic banking customers. Furthermore, incorporation of ethnicity factor in bank’s marketing strategies is important to secure competitive advantage particularly in dual banking system such as in Malaysia.

Client importance, bank risk, and systemic risk

2018 ◽  
Vol 26 (4) ◽  
pp. 511-544
Author(s):  
Li Li ◽  
Mary Ma ◽  
Victor Song
Keyword(s):  
Systemic Risk ◽  
Research Method ◽  
Design Methodology ◽  
Banking Industry ◽  
Bank Risk ◽  
Crash Risk ◽  
Content Type ◽  
Crisis Period ◽  
Distress Risk ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the effects of audit client importance on future bank risk and systemic risk in US-listed commercial banks. Design/methodology/approach The authors use archival research method. Findings The authors mainly find that client importance is negatively related with future bank-specific crash risk and distress risk, and also with sector-wide systemic crash risk and systemic distress risk in the future. The authors also report some evidence that these relations become more pronounced during the crisis period than during the non-crisis period. Moreover, the effect of client importance on systemic risk is found to strengthen in banks audited by Big-N auditors, by auditors without clients who restate earnings, and by auditors with more industry expertise. Research limitations/implications These findings contribute to the auditing and systemic risk literature. Practical implications This study has implications for regulating the banking industry. Originality/value This study provides original evidence on how client importance affects bank-specific risk and systemic risk of the banking industry.

scholarly journals Centralisation of corporate governance framework for Islamic financial institutions

2018 ◽  
Vol 10 (1) ◽  
pp. 36-51 ◽  
Author(s):  
Abd Hakim Abd Razak
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Banking Industry ◽  
State Level ◽  
Islamic Banking ◽  
Content Type ◽  
Individual Level ◽  
Advantages And Disadvantages ◽  
Governance Practices ◽  
Islamic Financial Institutions

Purpose The purpose of this paper is to supply basic insights into the principle of shūrā (consultation) in Islamic banking, the idea of a centralised approach to the corporate governance of Islamic financial institutions (IFIs), the roles of a centralised Sharīʿah board as the highest authority on Sharīʿah issues and its distinguishing features from a de-centralised system and the advantages and disadvantages of the two governance systems. Design/methodology/approach In analyzing these, the paper adopts the critical legal studies approach and refers to the provisions of the Qurʾan and Sunnah, ijmāʿ (consensus) of Sharīʿah scholars and recent Islamic banking reports. Findings Despite the fact that the double-digit growth of the current US$2tn Islamic banking industry is a promising sign for its further expansion – expecting to cross the US$6.5tn mark by 2020 – there remains concern over the lack of standardization or rather the diversified approaches to the corporate governance of IFIs across key Islamic banking regions. Practical implications There has been much debate surrounding the issue of whether the Islamic banking industry requires a centralised Sharīʿah board at the state level to complement the Sharīʿah boards at the IFIs’ individual level in providing better supervision of the Sharīʿah-compliance of IFIs. The fact that the industry is already equipped with two prominent standard-setting agencies in the form of the AAOIFI, the IFSB does little to suggest that best governance practices – which centre around the themes of consistency, harmony and uniformity – are on the horizon, at least not whilst their issued standards and guidelines remain voluntary for IFIs. Originality/value All in all, it is aspired that this paper may assist the reader in evaluating the pros and cons of the whole concept of Sharīʿah board centralisation.

scholarly journals Corporate governance and banking performance: the mediating role of intellectual capital among OIC countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ejaz Aslam ◽  
Razali Haron
Keyword(s):  
Corporate Governance ◽  
Intellectual Capital ◽  
Banking Industry ◽  
Generalized Method Of Moments ◽  
Islamic Banking ◽  
Governance System ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship

Purpose The existing literature asserted that the Islamic banking industry progress significantly, but it has increasingly found asset deficient which assaulted the performance of Islamic banks (IBs). The aim of this study to examine the mediating role of intellectual capital (IC) on the relationship between corporate governance (CG) mechanisms and IBs performance is examined (ATO, NPM). Design/methodology/approach A panel sample of 129 IBs is drawn from the 29 organisation of Islamic cooperation (OIC) countries from 2008 to 2017. Two-step system generalized method of moments (2SYS-GMM) was used to account for the unobserved endogeneity and heteroscedasticity problem. Findings The empirical findings demonstrate that there is a significant impact of the CG mechanism on IC. Moreover, the empirical findings indicate that CG has a direct influence on banking performance but it affects indirectly through IC. IC also appears to have a mediation role in the relationship between the CG mechanism and the performance of IBs. Research limitations/implications As the empirical research on IC from CG point of view in Islamic banking is generally new in the banking literature, the output of this research will contribute to the building up of empirical framework and practices regarding IC in the Islamic banking industry by using the resource-based theory as a leading theory and agency theory as a sub theory. It is anticipated that this study provided a superior comprehensive discussion of the IC in IBs across OIC countries which discovers the CG mechanism to influence the IC to improve banking performance. Practical implications This study offers useful insights to the regulators and practitioners to draw the rules and regulations in improving the CG mechanism and the effectiveness of internal controls by acknowledging the importance of IC in Islamic banking institutions. Particularly, the findings of this study may be of benefit to bankers to efficiently use the IC as a premise to design new and creative strategies to achieve a competitive advantage in the banking industry. Originality/value The study is unique in its nature because it presents a successful model for IBs to concentrate more on the role of IC in enhancing banking performance, which might be used by the banks to rearrange the roles within CG, to place their priorities regarding the internal governance system and financial plans for competency enhancement.

Understanding decoupling in response to corporate governance reform pressures

2015 ◽  
Vol 23 (4) ◽  
pp. 369-382 ◽  
Author(s):  
Mario Krenn
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Good Governance ◽  
Regulatory Change ◽  
Compliance Monitoring ◽  
Governance Reform ◽  
Firm Level ◽  
Content Type ◽  
Good Corporate Governance ◽  
Actual Use

Purpose – The purpose of this article is to explain under what circumstances firm-level adoption of codes of good corporate governance will more likely be superficial rather than substantive in nature. The article contains lessons for any agency or country that attempts to implement deep and lasting changes in corporate governance via codes of good corporate governance. Design/methodology/approach – The article reviews the literature on compliance with codes of good corporate governance and develops a conceptual model to explain why some firms that have formally adopted a code of good governance decouple this policy from its actual use. Findings – Decoupling in response to the issuance of codes of good corporate governance will be more attractive to firms and also more sustainable under the following conditions: firms’ compliance costs are relatively high firms’ costs of outright and visible non-compliance are relatively high and outsiders’ compliance monitoring costs are relatively high. Originality/value – The article contributes to the debate on compliance and convergence and provides policymakers with a conceptual framework for assessing the likelihood of successful regulatory change in corporate governance.

The evolution of the monitoring board in Japan: how the board performs monitoring function in Japanese corporate governance

2019 ◽  
Vol 19 (5) ◽  
pp. 999-1014
Author(s):  
Kohei Miyamoto
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Stock Exchange ◽  
White Paper ◽  
Lifetime Employment ◽  
Content Type ◽  
Legal Reforms ◽  
Legal Evolution ◽  
Commercial Code ◽  
Governance Institutions

Purpose The purpose of this paper is to trace a legal evolution of the monitoring board and to reveal what brought the evolution and what is expected to emerge. The paper points to unique complementarities in Japanese corporate governance institutions and norms which will affect how the monitoring board performs its functions. Design/Methodology/Approach Analysis is based on texts on corporate governance legislations in Japan from the revision of Commercial Code in 1950 to the revision of Companies Act in 2014. Other sources include Tokyo Stock Exchange regulations, White Paper on Corporate Governance and other academic literatures on Japanese corporate governance. Findings Changes of non-legal institutions and norms in Japanese corporate governance necessitated legal reforms toward the monitoring board. Persisting institutions and norms, in particular lifetime employment, influences how the monitoring board performs its functions in Japan. Originality/Value This paper explains how the evolution of the monitoring board in Japan emerged and what will cause different expected functions of the monitoring board in Japan and other jurisdictions.

scholarly journals Stewardship theory: is board accountability necessary?

2017 ◽  
Vol 59 (6) ◽  
pp. 1292-1314 ◽  
Author(s):  
Andrew Keay
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Design Methodology ◽  
Agency Problems ◽  
Stewardship Theory ◽  
Content Type ◽  
General Terms ◽  
Practical Implications

Purpose The purpose of the paper is to demonstrate that notwithstanding the fact that stewardship theory embraces things like trust of directors, their professionalism, loyalty and willingness to be concerned for the interests of others, as well as rejecting the foundations of classic agency problems that are asserted by agency theory, board accountability is as relevant to stewardship theory as it is to agency theory. Design/methodology/approach The paper applies the theory underlying board accountability in corporate governance, which is so often applied both in the corporate governance literature and in practice with agency theory in mind, to stewardship theory. Findings While the idea of accountability of boards is generally associated with an explanation and conceptualisation of the role and behaviour of directors as agents within classic agency theory, the paper demonstrates that board accountability is a necessary part of board life even if the role of directors is explained and conceptualised in terms of stewardship theory. Practical implications The paper suggests some accountability mechanisms that might be employed in a stewardship approach. Originality/value While many authors have talked in general terms about board accountability and its importance, this is the first paper that has engaged in a substantial study that links board accountability directly with stewardship theory, and to establish that accountability is necessary.

Dispute resolution in the Islamic banking industry of Tanzania: learning from other jurisdictions

2016 ◽  
Vol 9 (1) ◽  
pp. 125-142 ◽  
Author(s):  
Abdul-Nasser H.R. Hikmany ◽  
Umar A. Oseni
Keyword(s):  
Dispute Resolution ◽  
Dispute Settlement ◽  
Banking Industry ◽  
Banking System ◽  
Legal Framework ◽  
Policy Framework ◽  
Islamic Banking ◽  
Court System ◽  
Content Type ◽  
Good Policy

Purpose This paper aims to examine the prospects of a dispute resolution framework for the Islamic banking industry in Tanzania under the existing legal framework. Design/methodology/approach This paper is based on comparative study by drawing significant lessons from other jurisdictions, and argues that to avoid some of the initial drawbacks in the dispute resolution framework for Islamic banking transactions in more advanced jurisdictions like Malaysia and United Kingdom, it is important for Tanzania to get it right from the onset to effectively manage Islamic banking disputes. Findings The study finds that apart from the court system which provides the main avenue for Islamic finance litigation, other processes such as arbitration and mediation which are deemed to be more sustainable could also be developed for effective dispute management. Research limitations/implications The study focuses on Tanzania banking system with comparison to other jurisdictions. Practical implications An increase of Sharī’ah-compliant products in Tanzania has led to the establishment of a number of Islamic banks. This study demonstrates the need for Tanzania to make use and/or make adjustment of its laws for effective dispute settlement of banking-related disputes. Originality/value This study appears to be the first paper to draw significant experiences from other jurisdictions to resolve Islamic banking disputes in Tanzania. It is expected to provide a good policy framework for the stakeholders in the Islamic banking industry in Tanzania.

Pandemic meaning making: messing toward motet

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mary Beth Schaefer ◽  
Sandra Schamroth Abrams ◽  
Molly Kurpis ◽  
Charlotte Abrams ◽  
Madeline Abrams
Keyword(s):  
Participatory Research ◽  
Research Method ◽  
Design Methodology ◽  
Research Team ◽  
Research Study ◽  
Literacy Practices ◽  
Meaning Making ◽  
Musical Form ◽  
Content Type ◽  
At Home

Purpose In this child–parent research study, three adolescents theorize their meaning-making experiences while engaged in exclusive online learning during a three-month stay-at-home mandate. The purpose of this study is to highlight youth-created understandings about their literacy practices during COVID-19 in order to expand possibilities for youth-generated theory. Design/methodology/approach This child–parent research builds upon a critical dialectical pluralist (CDP) methodology, which is a participatory research method that looks to privilege the child as a co-researcher at every stage of the inquiry. In this research study, the adolescents work together to explore what it means to create and learn alone and then with others via virtual platforms. Research team discussions initially were scaffolded by the parent–researchers, and the adolescents developed their analyses individually and together, and their words and insights situate the findings and conclusions. Findings The musical form of a motet provides a metaphor that three adolescents used to theorize their meaning-making experiences during the stay-at-home order. The adolescents determined that time, frustration, and space were overarching themes that captured the essence of working alone, and then together, in messy, orchestrated online ensembles. Originality/value In this youth-centric research paper, three adolescents create understandings of their meaning-making experiences during the stay-at-home order and work together to determine personal and pedagogical implications.

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