scholarly journals Shar¯ı‘ah Governance Framework and Perception of Islamic Banking in Pakistan

2021 ◽  
Vol 11 (01) ◽  
pp. 75-89
Author(s):  
Kazi Afaq Ahmed ◽  
◽  
Masood Hassan ◽  
Imam Uddin ◽  
◽  
...  
Keyword(s):  
Sample Size ◽  
Public Perception ◽  
Good Governance ◽  
Practical Implication ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Governance System ◽  
Governance Framework ◽  
Study Results

Purpose: Globally commercialized Islamic Banks were launched in 1970s at Middle East, Africa while in year 2002 at Pakistan. As of 2019, there were 5 full-fledge Islamic Banks operating in Pakistan and nearly all conventional banks have Islamic windows. Islamic Banks captured more than 15.5% share of the total Pakistan’s banking market and have far greater potential and capacity to take major share in the market. Methodology: Researchers have examined State Bank of Pakistan’s Shar¯ı‘ah Governance Framework and compared it with the Shar¯ı‘ah governance framework of Malaysia, in light of IFSB guidelines. Based on key findings, focused group interviews of Shar¯ı‘ah scholars were carried out to get their perception about the Shar¯ı‘ah compliance and effectiveness of Shar¯ı‘ah Governance Framework in Pakistan. Findings: The study focused on 5 key components of a good governance system, independence of Shar¯ı‘ah board, competence, confidentiality, consistency and disclosure requirement. The study revealed that Pakistan’s Shar¯ı‘ah governance system is compliant with IFSB guidelines and comparable with Malaysian model. Significance: This study is a unique study in the context of Pakistan. The finding of this research study will provide a comprehensive over view of the Shar¯ı‘ah Governance Framework (SGF) and perception of the Shar¯ı‘ah Scholars on SGF. The study findings may be useful for Islamic banks and other institutions using Islamic mode of financing. Limitations: The study was conducted on a limited sample size mainly from Karachi however the study may be replicated on a bigger sample size and including other cities while the number of conducted interviews can be increased if we go for pan Pakistan as they were only 15 dues to limitation of city as Karachi. Practical Implication: The Shar¯ı‘ah scholars have positive opinion and shown satisfaction on Shar¯ı‘ah governance system and effectiveness of Shar¯ı‘ah controls.The study results can be used to improve public perception about Shar¯ı‘ah compliance of Islamic banking system in Pakistan.

scholarly journals PERAN TATA KELOLA PERBANKAN SYARIAH TERHADAP RISIKO PERBANKAN SYARIAH DI INDONESIA

2020 ◽  
Vol 8 (1) ◽  
pp. 45
Author(s):  
Rudy Hartanto
Keyword(s):  
Corporate Governance ◽  
Credit Risk ◽  
Good Governance ◽  
Banking System ◽  
Islamic Banking ◽  
Investment Risk ◽  
Islamic Banks ◽  
Control Variables ◽  
Banking Market ◽  
Banking Business

The increased penetration of the Islamic banking market in Indonesia is one of the highest in ASIA. The enhancement in the market has an impact on increasing the risk complexity of Islamic banking business activities. Sharia banking risks need to be managed and controlled properly in order to prevent banking failures. Bank governance (corporate governance) is indicated as one of the things that plays an important role in determining the level of risk faced by banks. The purpose of this study is to examine whether good governance can reduce the risk of Islamic banking. This study uses the population of Islamic banking from 2014-2018. The samples obtained in this study are 58 Islamic banks. The results showed that good governance can reduce the banking risk. In addition, the testing using control variables showed that the greater the size of the banking system that is proxied by the total assets, the higher the risk received by banks both from credit risk to investment risk.

scholarly journals UNIT KEPATUHAN DAN AUDIT INTERNAL BANK SYARIAH DI INDONESIA; SUDAHKAH SESUAI DENGAN PRINSIP SHARIAH GOVERNANCE?

2021 ◽  
Vol 8 (1) ◽  
pp. 105-129
Author(s):  
Muhammad Fakhrul Arrazi
Keyword(s):  
Qualitative Methods ◽  
Banking System ◽  
Internal Audit ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Work Practices ◽  
Governance Framework ◽  
Shariah Governance ◽  
Banking Operations

Shariah governance is crucial in the Islamic banking system to ensure that all commercial operations comply with Islamic principles and differentiate Islamic banking operations from conventional banking. This research discusses the similarities between the practice of the compliance unit and internal audit of Islamic banks in Indonesia and Bank Indonesia/ OJK’s regulations and existing standards. The data for the research were collected through interviews and documentation instrument, and analyzed by using qualitative methods. Based on the analysis, the researcher identified that the work practices of the compliance unit and internal audit of Islamic banks in Indonesia are in line with regulations promoted by Bank Indonesia/ OJK, AAOIFI and IFSB shariah governance, but are still not comprehensive when compared to the Shariah governance framework of Bank Negara Malaysia and the opinions of other practitioners of Islamic Economics.

Good Corporate Governance Principles in Indonesian Syariah Banking

2020 ◽  
Vol 2 (1) ◽  
pp. 8-13
Author(s):  
Andrew Shandy Utama
Keyword(s):  
Corporate Governance ◽  
Financial Services ◽  
Islamic Law ◽  
Good Governance ◽  
Banking System ◽  
Supervisory Board ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Good Corporate Governance ◽  
Conventional Banks

Islamic banks are banks that carry out their business activities based on the principles of Islamic law in banking activities based on fatwas issued by the National Sharia Council of the Majelis Ulama Indonesia. This research aims to explain the principles of Good Corporate Governance in Islamic banking in Indonesia. The method used in this research is normative legal research. The results of the research explained that to maintain the trust of Indonesian people who are predominantly Muslim, Islamic banking must apply the principle of Good Corporate Governance in its management. The application of the principle of Good Corporate Governance in Islamic banking is strictly regulated in Article 34 Paragraph (1) of Law Number 21 of 2008, which emphasizes that Islamic banks must implement good governance that includes the principles of transparency, accountability, responsibility, professionalism and fairness in carrying out its business activities. Form of application of the principles of Good Corporate Governance in Islamic banking is supervision conducted by the National Sharia Council of the Majelis Ulama Indonesia in general and the Sharia Supervisory Board specifically in each Islamic bank. Based on data from the Financial Services Authority in 2017, currently there are 13 Islamic banks in Indonesia, 13 Islamic business unit of conventional banks, and 102 Islamic rural banks. This is evidence of the existence and development of Islamic banking that is significant in the national banking system.

Purification of Non-Halal Income in Malaysian Islamic Banks: An Overview (Penyucian Pendapatan Tidak-Halal Di Bank-Bank Islam Malaysia: Satu Tinjauan)

2017 ◽  
Vol 14 (2) ◽  
pp. 305-326
Author(s):  
Saidatolakma bt Mohd Yunus ◽  
Sayed Sikandar Al Haneef ◽  
Zuraidah Kamaruddin ◽  
Mek Wok Mahmud
Keyword(s):  
Special Reference ◽  
Banking System ◽  
Financial Impact ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Total Income

Abstract Purification of non-halal income (NHI) is the process of deducting non-halal or tainted income deemed unacceptable by Shairaah from the total income generated in Islamic banks. It is undeniable that Shariaah non-compliance events still occur in Islamic banking system considering the fact that Islamic banks have not been able to fully comply with the requirements of Shariaah in their transactions, operations and financial activities. The realization of Shariaah non-compliance events in Islamic banks in some situations involve a financial impact which leads to NHI. All NHI identified must be purified since Islam does not allow any non-halal income to be held, kept and utilized for their own benefits. This paper will give a new insight on purification of NHI by first delineating the concept of mal haram in Islam as well as the Shariaah non-compliant events realized in the banks, with special reference to cases involving Islamic banks in Malaysia. Keywords: Islamic banking, non-halal income, purification, charity, waqf. Abstrak Penyucian pendapatan tidak halal (NHI) adalah proses memisahkan pendapatan tidak halal menurut Syari'ah daripada jumlah keseluruhan pendapatan yang dihasilkan oleh bank Islam. Tidak dapat dinafikan bahawa masih berlaku ketidakpatuhan Syariah dalam sistem perbankan Islam. Ini adalah kerana bank Islam tidak dapat mematuhi sepenuhnya keperluan Syariah dalam transaksi, operasi dan kegiatan kewangan mereka. Kewujudan perkara yang tidak mematuhi Syariah di bank Islam dapat memberi kesan kepada status kewangan yang boleh membawa kepada berlakunya pendapatan haram. Pendapatan tidak halal yang sudah dikenalpasti mesti disucikan kerana Islam tidak membenarkan apa-apa pendapatan tidak halal disimpan dan digunakan untuk faedah mereka sendiri. Kajian ini memberi pandangan baru tentang penyucian pendapatan tidak halal dengan membincangkan konsep harta haram dalam Islam serta perkara-perkara yang tidak patuh syariah yang berlaku di bank-bank Islam di Malaysia. Kata Kunci: Perbankan Islam, pendapatan tidak-halal, Penyucian, Amal, wakaf.

scholarly journals ISLAMIC BANKING AND INVESTMENT FINANCING: A CASE OF ISLAMIC BANKING IN KENYA

2017 ◽  
Vol 2 (1) ◽  
pp. 66
Author(s):  
Abbas Said Abubakar ◽  
Dr. Josiah Aduda
Keyword(s):  
Real Estate ◽  
Motor Vehicle ◽  
Survey Design ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Investment Financing ◽  
Trade Financing ◽  
Real Estate Financing ◽  
Sme Financing

Purpose: The purpose of this study was to establish the effect of Islamic banking on investment financing in Islamic banks in Kenya.Methodology: This study employed descriptive survey design. The population of this research consisted of 8 commercial banks offering Shariah compliant products. The study used secondary data for the period 2009 to 2012. Data was analyzed using Statistical Package for Social Sciences (SPSS) and results were presented in frequency tables and figures. The data was then analyzed in terms of descriptive statistics like frequencies, means and percentages.Results: The study findings indicated that there were various Islamic banking products that Islamic banks used to finance their investments. This included motor vehicle financing, mortgage financing, asset financing, real estate financing, trade financing and SME financing. The study also indicated that there were various modes of financing used by Islamic banking such as profit and loss sharing, Ijara and murahaba. Regression results revealed that motor vehicle financing was statistically significant in explaining loans advanced to customers in Islamic banks.  However mortgage financing, asset financing, real estate financing, trade financing and SME financing were not statistically significant in explaining loans advanced to customers in Islamic banks but they were positively correlated.Unique contribution to theory, practice and policy: The study recommends that the management of the banks to get well equipped and competent employees on Islamic banking products as most Islamic banks are currently managed by people who have been educated and trained in the conventional banking system. Thus, more time may be required for the unique characteristics of Islamic financial instruments to be completely accepted and understood by both bank personnel and customers. It is also recommended that the terms and conditions of acquiring a loan be made more appealing and considerate for more investors to approach the banks for assistance as the Shari`ah restricts the type of businesses for which Islamic banks can provide financing.

scholarly journals Perkembangan Bank Syariah PAsca UU 21 Tahun 2008

2012 ◽  
Vol 12 (1) ◽  
pp. 43
Author(s):  
Luhur Prasetiyo
Keyword(s):  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Core System ◽  
Over Time

<em>Islamic banking system still grows continuously over time in various countries, including Indonesia. Although it was a bit late, if it was compared to another, Islamic banking system began to develop in Indonesia in the early 1990’s. At that time, Islamic banking, however, was still running with its all characteristics based on the rule without adequate law. Islamic banking began to be recognized legally as the legalization of UU Perbankan 1992, and it was followed by its deregulation in 1998, and Islamic banking in Indonesia finally got its full legality after legalization of UU Perbankan Syariah in 2008. UU Perbankan Syariah as a new law certainly has significance for the development of Islamic banking in Indonesia. Based on the BI statistics, Islamic banks, especially Bank Umum Syariah after legalization of UU Perbankan Syariah, has been growing significantly, among in the number of banks, total assets, and total financing. Unfortunately, the growth of PLS (profit and loss sharing) doesn’t occupy a significant position in total financing of Islamic banks, whereas PLS is core system in Islamic banking.</em>

scholarly journals Indeks Kinerja Perbankan Syariah di Asia Tenggara Berdasarkan Konsep Maqâshid al-Syarî`ah

2018 ◽  
Vol 22 (1) ◽  
pp. 33
Author(s):  
Herni Ali HT ◽  
Ali Rama
Keyword(s):  
Southeast Asia ◽  
Case Studies ◽  
Performance Index ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Brunei Darussalam ◽  
Indexing Method ◽  
Low Performance ◽  
Individual Education

Abstract: Sharia Banking Performance Index in Southeast Asia Based on the Concept of Maqâshid al-Syarî`ah. Islamic banks as a banking system that carries out Islamic vision in the field of finance and economics should develop a method of measuring performance in accordance with its vision. The vision of Islamic banks can be derived from the vision that chills reversed from the laws of sharia which is called maqâshid al-syarî`ah. Therefore, this study intends to develop methods of measuring the performance of Islamic banking based on the skill maqâshid al-syarî`ah. The maqâshid al-syarî`ah index is an index based on the three main visions of sharia banks, namely individual education (ta’dîb al-fard), justice enforcement (iqâmah al`adl) and welfare encouragement (jalb al-maslâhah). From the vision (dimension) is derived into indicators that are relevant and measurable. This research uses indexing method in calculating maqâshid al-syarî`ah index with case studies of sharia banking that has been operating in Southeast Asia covering Indonesia, Malaysia, Brunei Darussalam, Singapore, Thailand and Philippines. This tudy found that the majority of sharia banks in Southeast Asia have a low-performance maqâshid al-syarî`ah index. This shows that sharia banking is generally still run based on conventional vision even though it has operated in accordance with sharia principles or sharia compliance. 

scholarly journals Pola dan Perkembangan Perbankan Syariah di Indonesia

2019 ◽  
Vol 3 (1) ◽  
pp. 34-41
Author(s):  
Ahmad Khoirin Andi
Keyword(s):  
Financial Institutions ◽  
Banking System ◽  
Supervisory Board ◽  
Islamic Banking ◽  
Islamic Banks

The development of Islamic banking in Indonesia with the complexity of the problem in its journey has shown good results and as a reference for the pattern and strategy for developing financial institutions. Islamic banking with its (the) sharia principles of avoiding usury practices and prioritizing mutual benefits have proven to be a complete banking system. But besides that, additional supervision is needed to ensure the implementation of sharia principles, namely by the existence of a sharia supervisory board (DPS) to implement fatwas as guidelines for the operation of Islamic banks issued by the National Sharia Council (DSN).

scholarly journals EVALUATION OF DUAL BANKING SYSTEM IN BANKING IN INDONESIA

2020 ◽  
Vol 11 (2) ◽  
Author(s):  
Amanatun Nisfah Nurun Nikmah ◽  
Tulus Suryanto ◽  
Surono Surono
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Common Goal ◽  
The Face ◽  
Capital Access ◽  
Conventional Banks ◽  
Banking Institution ◽  
Negative Factors

Evaluation of Dual Banking System in Indonesia. Dual Banking System is the application of two banking systems in one banking institution, namely conventional banking and Islamic banking. Indonesia can optimize the dual banking system through strength share and weakness cover, namely Islamic banks are generally superior in terms of a more stable system in the face of market changes but have deficiencies in infrastructure, whereas conventional banks have large market and capital access and more infrastructure complete, but very vulnerable to crises due to the negative factors of economic integration which are already very strong. The superiority of the dual banking system concept is seen in two separate systems that operationally do not affect each other, but have one common goal, namely financial stability that supports economic growth. So, to achieve this goal the two systems can work together in external factors such as access to capital, infrastructure, supervision or clearing systems that can help interbank liquidity.

scholarly journals ISLAMIC CORPORATE IDENTITY IN THE PRACTICE OF ANNUAL REPORT DISCLOSURE ISLAMIC BANK

2012 ◽  
Vol 1 (1) ◽  
pp. 34
Author(s):  
Ratih Paramitasari
Keyword(s):  
National Economy ◽  
Annual Report ◽  
Banking System ◽  
Corporate Identity ◽  
Annual Reports ◽  
Islamic Banking ◽  
Reporting Standards ◽  
Islamic Banks ◽  
Islamic Financial Institutions ◽  
The Ideal

<span>The development of Islamic banking is directed to provide great benefit to society and contribute optimally to the national economy. Islamic banking system and conventional banking system together synergistically supports the mobilization of public funds broadly improve the ability of finance to sectors of national economy. Together with the development of Islamic banking industry in Indonesia, there are many controversies from the community, where most problems highlighted are sticking the label of syariah in Islamic financial institutions are still considered not feasible. Based to these problems, researchers want to conduct this research on the suitability of the annual report disclosure practices of Islamic banks in Indonesia to the reporting standards that reflect the ideal of Islamic Corporate Identity.This study using a checklist for the data analysis consisting of the five themes and the eight dimensions that are should be disclosed in annual reports of Islamic banks. From the results of the assessment aspect of the checklist is then poured in the index EII (ethical identity index). From the calculation of EII, it can be seen that the annual report disclosure practices syariah banks for 2007, 2008, and 2009, has approached the ideal reporting standards that reflect the Islamic Corporate Identity.</span>

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