scholarly journals Shariah Governance Practices of Malaysian Islamic Banks in the Light of Shariah Compliance

2020 ◽  
Vol 13 ◽  
Keyword(s):  
Islamic Banks ◽  
Governance Practices ◽  
Shariah Governance

scholarly journals WHY DOES BANGLADESH REQUIRE A CENTRALIZED SHARIAH GOVERNANCE FRAMEWORK FOR ISLAMIC BANKS?

2022 ◽  
Vol 7 (1) ◽  
pp. 24-42
Author(s):  
Md. Kausar Alam ◽  
Oli Ahad Thakur
Keyword(s):  
Central Bank ◽  
Banking Industry ◽  
Monitoring Systems ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Governance Framework ◽  
Governance Practices ◽  
Supervisory Boards ◽  
Shariah Governance ◽  
Regulatory Challenges

The main objective of this article is to describe the logical reasons why a Centralized Shariah Governance Framework (CSGF) provided by the Central Bank of Bangladesh (Bangladesh Bank) is essential for the country’s Islamic banks. In doing so, it identifies the major regulatory challenges (self-developed and disparate use of Shariah Governance (SG) practices) faced by Islamic banks in Bangladesh. It considers an analytical approach to explore the significance of a CSGF for Islamic banks in Bangladesh and examines the current diversified procedures of SG practices. This article reveals that the self-developed SG practices of Islamic banks in Bangladesh have created confusion and pessimism among the practitioners, bankers and even to the general people and regulators which is negatively affecting the overall image of Islamic banks. Such incongruent governance practices have led to inconsistencies in SG structures, implementation procedures, monitoring activities. In addition, this article reveals that these deficiencies usually exist due to weak monitoring systems of the Central Bank, ineffective functioning of individual Shariah Supervisory Boards (SSB) and the absence of comprehensive SGF. The article argues that the Central Bank of Bangladesh should initiate to reform its Islamic banking industry by introducing a CSGF aimed to identify the roles, responsibilities, powers, and functions of SSB; thereby improving governance, accountability, and overall Shariah compliance quality. This article is hoped to be beneficial for the regulators and practitioners to consider revising current practices.   Keywords: Centralization, Bangladesh Bank, Islamic banks, Shariah governance framework.   Cite as: Alam, M. K., & Thakur, O. A. (2022). Why does Bangladesh require a centralized Shariah governance framework for Islamic banks?  Journal of Nusantara Studies, 7(1), 24-42. http://dx.doi.org/10.24200/jonus.vol7iss1pp24-42

scholarly journals SHARIAH GOVERNANCE DAN KUALITAS TATA KELOLA PERBANKAN SYARIAH

2015 ◽  
Vol 4 (2) ◽  
Author(s):  
Ali Rama ◽  
Yella Novela
Keyword(s):  
Corporate Governance ◽  
Unique Feature ◽  
Board Members ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Board Meeting ◽  
Governance System ◽  
Governance Practices ◽  
Shariah Governance

Corporate governance for Islamic banking has a unique feature compared with banking conventional. It is required to complement the existing governance framework with shariah governance system to ensure the shariah compliance of all Islamic banking’s operational. Therefore, this study aims to analyze the effect of the practice of shariah governance to the quality of GCG implemented by Islamic banks. Practices of shariah governance are measured by number of shariah board members, doctoral qualification of shariah board and frequency of shariah board meeting. The study finds that shariah governance has a significant impact to the increase quality of GCG in Islamic banks. Another interesting finding is that the increase of credit risk (NPF) leads to the worse of Islamic banks’ corporate governance. ROA and CAR have no significant effect to the quality of corporate governance in Islamic banks. The study recommends that the Islamic banks should improve their shariah governance practices in order to increase their governance performance as well as public confidenceDOI: 10.15408/sjie.v4i2.2301

The Impact of Shariah Governance and Corporate Governance on the Risk Management Practices: Evidence from Local and Foreign Islamic Banks in Malaysia

2018 ◽  
Vol 15 (2) ◽  
pp. 1-20
Author(s):  
Sabri Embi ◽  
Zurina Shafii
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Principal Component ◽  
T Test ◽  
The Body ◽  
Primary Data ◽  
Islamic Banks ◽  
Shariah Governance ◽  
The Impact

The purpose of this study is to examine the impact of Shariah governance and corporate governance (CG) on the risk management practices (RMPs) of local Islamic banks and foreign Islamic banks operating in Malaysia. The Shariah governance comprises the Shariah review (SR) and Shariah audit (SA) variables. The study also evaluates the level of RMPs, CG, SR, and SA between these two type of banks. With the aid of SPSS version 20, the items for RMPs, CG, SR, and SA were subjected to principal component analysis (PCA). From the PCA, one component or factor was extracted each for the CG, SR, and RMPs while another two factors were extracted for the SA. Primary data was collected using a self-administered survey questionnaire. The questionnaire covers four aspects ; CG, SR, SA, and RMPs. The data received from the 300 usable questionnaires were subjected to correlation and regression analyses as well as an independent t-test. The result of correlation analysis shows that all the four variables have large positive correlations with each other indicating a strong and significant relationship between them. From the regression analysis undertaken, CG, SR, and SA together explained 52.3 percent of the RMPs and CG emerged as the most influential variable that impacts the RMPs. The independent t-test carried out shows that there were significant differences in the CG and SA between the local and foreign Islamic banks. However, there were no significant differences between the two types of the bank in relation to SR and RMPs. The study has contributed to the body of knowledge and is beneficial to academicians, industry players, regulators, and other stakeholders.

scholarly journals INTELLECTUAL CAPITAL, FINANCIAL CRISIS AND PERFORMANCE OF ISLAMIC BANKS: DOES SHARIAH GOVERNANCE MATTER?

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Tasawar Nawaz
Keyword(s):  
Financial Crisis ◽  
Intellectual Capital ◽  
Economic Performance ◽  
Islamic Banks ◽  
Knowledge Resources ◽  
Finance Industry ◽  
Before And After ◽  
And Performance ◽  
Shariah Governance ◽  
The Impact

This paper empirically examines the impact of intellectual capital (IC) and Shariah governance on economic performance of 47 Islamic banks (IBs) operating in the Gulf Cooperation Council (GCC) region in pre- and post-financial crisis period. The analysis suggests that higher IC efficiency helps IBs to improve their odds of survival at all times i.e. before- and after-crisis. Further, higher IC efficiency helps IBs to maintain their profitability i.e. ROA and market valuation i.e. Tobin’s Q at all times. Arguably, knowledge-resources i.e. IC is the main line of defence for IBs against negative shocks. Lastly, the study reveals that Shariah governance alone may fall short in explaining the growth trends in Islamic finance industry. Keywords: Intellectual Capital; Shariah Governance; Financial Crisis; Islamic Worldview; Economic Performance.

Islamic Banking in Malaysia†

2012 ◽  
Vol 40 (1-2) ◽  
pp. 191-201 ◽  
Author(s):  
Sherin Kunhibava
Keyword(s):  
Central Bank ◽  
Islamic Law ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Average Growth ◽  
Governance Framework ◽  
Finance Industry ◽  
Asset Growth ◽  
The 1960S ◽  
Shariah Governance

AbstractIslamic banking is the conduct of banking according to Shariah or Islamic law. Statistically Islamic banking has had phenomenal growth, according to the Asian Banker Research Group, the world's 100 largest Islamic banks have set an annual asset growth rate of 26.7% and the global Islamic finance industry is experiencing an average growth of 15-20% annually1. Recently the Prime Minister of Malaysia commented that Malaysia has been maintaining its leadership in Islamic banking and finance for over three decades2. As an International leader in Islamic banking, it would be interesting to explore the development of Islamic banking in Malaysia. This will be the objective of this paper. This paper will focus on the historical development of Islamic banking in Malaysia, from the creation of the Haj Pilgrim's Fund Board in the 1960s to the current Islamic banking scene of 17 local Islamic banks and five International Islamic banks in operation. This paper will also explore the unique regulatory and governance framework of Islamic banking in Malaysia, by touching on the Islamic banking Act 1983, the Central Bank of Malaysia Act 2009, the Banking and Financial Institutions Act 1989 and the Shariah Governance Framework introduced in 2011 by the Central Bank of Malaysia. This paper will also briefly introduce how Islamic banking works.

scholarly journals Disclosure, Shariah governance and financial performance in Islamic banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mariem Ben Abdallah ◽  
Slah Bahloul
Keyword(s):  
Financial Performance ◽  
Least Squares ◽  
Good Governance ◽  
Generalized Method Of Moments ◽  
Islamic Banks ◽  
Content Type ◽  
Governance Indicators ◽  
Shariah Governance ◽  
The Impact ◽  
Robustness Check

PurposeThis study aims at investigating the impact of the disclosure and the Shariah governance on the financial performance in MENASA (Middle East, North Africa and Southeast Asia) Islamic banks.Design/methodology/approachWe use the Generalized Least Squares (GLS) regression models to check the interdependence relationship between the disclosure, the Shariah governance and the financial performance of 47 Islamic banks (IBs) from ten countries operating in MENASA region. The sample period is from 2012 to 2019. In these regressions models, Return on Assets (ROA) and Return on Equity (ROE) are the dependent variables. The disclosure and the Shariah governance indicators are the independent factors. To measure the Shariah governance, we use the three sub-indices, which are the Board of Directors (BOD), the Audit Committee (AC) and the Shariah Supervisory Board (SSB). Size, Leverage and Age of the bank are used as control variables. We also used The Generalized Method of Moments (GMM) and the three-stage least squares (3SLS) estimations for robustness check.FindingsResult shows a negative relationship between the disclosure and the two performance measures in IBs. Furthermore, as far as the governance indicators are concerned, we found that the BOD and AC, as well as the BOD and SSB, have a positive and significant impact on the ROA and ROE, respectively. This reveals that good governance had a significant association with higher performance in MENASA IBs.Originality/valueThe paper considers both IBs that adopt mandatory as well as voluntary AAOIFI standards and the GLS method to investigate the impact of the AAOIFI disclosure and the Shariah governance on ROA and ROE. Also, it uses the GMM and the 3SLS estimations for robustness check. It is relevant for researchers, policymakers and stakeholders concerned with IBs' performance.

scholarly journals Implementasi Shariah Governance serta Implikasinya terhadap Reputasi dan Kepercayaan Bank Syariah

2012 ◽  
Vol 12 (1) ◽  
pp. 87
Author(s):  
Rahman El Junusi
Keyword(s):  
Market Share ◽  
Structural Equation ◽  
Goodness Of Fit ◽  
Descriptive Analysis ◽  
Measurement Instrument ◽  
Equation Modeling ◽  
Average Score ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Shariah Governance

<em>Syariah banking is currently growing rapidly and become part of financial life in the Islamic world. However, there are two important realities to observe in the life of Islamic Banking in Indonesia. First, Islamic banks are faced with a market share that has not met the target by 5 percent. Second, compliance of Islamic banking to Islamic principles was decline. Therefore, it is needed a strategy of development through the implementation of syariah governance. Syariah Governance implementation is expected to have an impact on reputation and customer confidence which in turn can increase the market share of syariah banks. Based on this background, the research problem is how the implementation of syariah governance and its impact on the reputation and confidence in Islamic banks. This research object is Muamalat banks operating in Central Java (Semarang, Solo, Purwokerto). The research sample is 200 respondents using the techniques of analytical judgment. Measurement instrument using 1-5 Likert scale, from strongly disagree (STS) untill Strongly Agree (SS). Firth to know implementation of Shariah governance, it is used a quantitative descriptive analysis using the average (mean). Second, to examine the effect of the implementation of Shariah governance to reputation and customer confidence in Islamic banks, it uses Structur Equation Model (SEM) with program AMOS 4.0 Engineering Structural Equation Modeling (SEM) which consists of two kinds of technical analysis, the goodness of fit and regression weight on the SEM to assess the suitability of the model estimation based on measuring the level of significance of some of the goodness of fit good and bad in a model, so the degree of the model accuracy is determined by the cut-off value.This research concluded that calculations of total assessment on the implementation of Shariah Governance Islamic bank (Bank Muamalat) showed an average score of 3.42 7 in good categories. It shows that shariah compliance is a indicator giving biggest contribution in the implementation of Islamic governance. Compliance to sharia is the main factor to costumer in establishing partnership with syariah banks and deciding to retain syariah banks. <br /></em>

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