Legal and Corporate Governance Framework for Islamic Banks in Pakistan

Shari’ah Scholars’ Insight on Shari’ah Governance Framework for Islamic Banking Institutions in Pakistan One of the major reasons behind the financial crises generally and the 2008 crises especially, was the poor corporate governance in financial institutions. For ensuring good Islamic corporate governance as well as Shari’ah compliant environment in Islamic banking institutions (IBIs), Shari’ah governance framework (SGF) was developed in many countries including Pakistan. This study is conducted to evaluate the SGF, its implementation level, and the challenges facing the IBIs in the implementation of the SGF in Pakistan. For this purpose, the insight of the Shari’ah scholars is taken on SGF by following the qualitative research approach with semi-structured interviews of the scholars. The respondents included Shari’ah Board’s (SB) members and Incharges of Shari’ah Compliance Department (SCD) in various IBIs in Pakistan. The researchers used Nvivo12 software for the analysis of the interviews data. The study discovered some important issues faced by Islamic banks in the implementation of SGF. It is evident from the research that there are shortcomings and weaknesses in the implementation of Shari’ah governance framework which requires improvements such as interpretation and quantification of the provisions of the SGF, approval from Shari’ah Board (SB) for all minute requirements, reporting line issues, and communication gap between the board of directors (BODs) and the members of SB. This research work suggests that the State Bank of Pakistan (SBP) should revisit the SGF in the light of the present study and further improve its provisions as well ensure the implementation of SGF in true letter and spirit. Keywords: : Shari’ah governance framework, Shari’ah scholars, Implementation, Islamic banking institutions

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

The Journal of Muamalat and Islamic Finance Research ◽

10.33102/jmifr.v15i2.174 ◽

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.

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Pengaruh Islamic Social Reporting terhadap Profitabilitas (Return on Asset dan Return on Equity) Pada Bank Umum Syariah Di Indonesia

FALAH Jurnal Ekonomi Syariah ◽

10.22219/jes.v4i2.9870 ◽

2019 ◽

Vol 4 (2) ◽

pp. 1

Author(s):

Ana Santika

Keyword(s):

Corporate Governance ◽

Commercial Banks ◽

Sampling Technique ◽

Social Reporting ◽

Annual Reports ◽

Islamic Banking ◽

Islamic Banks ◽

Collection Method ◽

Return On Equity ◽

Social Environmental

The act of accuracy and prudence is very important in the company because is the factor that determines the sustainability of companies such as banking. This study aims to analyze the effect of Shariah Complaints towards the profitability of Islamic Banks in Indonesia. This type of research is quantitative. The data collection method used is the documentation method and library study method. The sampling technique uses purposive sampling with the criteria of Islamic commercial banks that publish annual-reports from 2013 to 2017 from 13 Islamic commercial banks (BUS) in Indonesia. The results of this study show that the Funding and Investment, Products and Services, Employees, Community or Social, Environmental, Corporate Governance simultaneously does not have influence significantly the ROE variable, but it does significantly influence to ROA. Means that the wider the Islamic social reporting of Islamic banking, the greater the profitability of Islamic banking. In addition, high profitability will encourage managers to provide more detailed information, because they want to convince investors of company profits and its compensation for management.

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Does corporate governance affect the performance of Islamic banks? New insight into Islamic countries

Corporate Governance ◽

10.1108/cg-11-2019-0350 ◽

2020 ◽

Vol 20 (6) ◽

pp. 1073-1090 ◽

Cited By ~ 2

Author(s):

Ejaz Aslam ◽

Razali Haron

Keyword(s):

Corporate Governance ◽

Audit Committee ◽

Positive Impact ◽

Islamic Banks ◽

Governance Mechanism ◽

Method Of Moment ◽

Content Type ◽

Return On Equity ◽

Islamic Countries ◽

And Performance

Purpose Corporate governance plays a significant role to overcome agency issues and develop the culture of transparency and openness. In this context, this paper aims to examine how corporate governance mechanisms affect the performance of Islamic banks (IBs). Design/methodology/approach Stepwise, two-step system generalize method of moment estimation technique is used in the analysis in which control variables are added into the model sequentially. This study used data on 129 IBs from 29 Islamic countries (Middle East, South Asia and Southeast Asia) during the period of 2008 to 2017. Findings The findings suggest that the audit committee (AUDC) and Shariah board (SB) have positive impact on the performance of IBs (return on assets and return on equity). However, board size and risk management committee have negative and significant effect on the performance of IBs. CEO duality and non-executive directors have mixed relationship with the performance of IBs. These results support the argument that IBs need to improve their financial performance through appropriate governance mechanism. Research limitations/implications The findings of the study added a new dimension to the governance research that could be a valuable source of knowledge for policymakers and regulators to improve the existing governance mechanism for better performance of IBs. Originality/value The study fills the gap in the literature by addressing the issue of corporate governance on performance of IBs across countries. Agency theory is discussed to explain the relationship between corporate governance mechanism and performance.

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Corporate governance in microfinance organizations: along and winding road

Management Decision ◽

10.1108/00251740110391466 ◽

2001 ◽

Vol 39 (4) ◽

pp. 296-302 ◽

Cited By ~ 44

Author(s):

Marc Labie

Keyword(s):

Corporate Governance ◽

Governance Framework ◽

Key Issues

Over the last few years, more and more attention has been devoted to microfinance by academics and practitioners interested in development issues. This paper is part of this trend, as it tries to identify to what extent the corporate governance framework can be applied to microfinance organizations. Therefore, after considering some of the key issues, it tries to show how relevant these issues are to the microfinance industry.

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Current Practices and Improvement of Saudi Corporate Governance Framework

Journal of Politics and Law ◽

10.5539/jpl.v10n4p81 ◽

2017 ◽

Vol 10 (4) ◽

pp. 81

Author(s):

Khalid Saad Al-habshan

Keyword(s):

Corporate Governance ◽

Legal System ◽

Annual Reports ◽

Legal Basis ◽

Governance Framework ◽

Preceding Article ◽

Financial Scandals ◽

The Way ◽

Current Practices

The preceding article described the notions of disclosure and transparency and their purpose and importance in practice. An understanding of the requirements and elements of the practice of disclosure leads to a discussion of its benefits and advantages, as well as the consequences of a lack of transparency during financial scandals. The Saudi approach to disclosure and transparency is also examined based on the evidence given in board annual reports. This paper highlights the way the Saudi legal system evaluates corporate governance and its legal basis.

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The Next Stage of Reforms: Korean Corporate Governance in the Post-Asian Financial Crisis Era

Asian Journal of Comparative Law ◽

10.1017/s2194607800000818 ◽

2006 ◽

Vol 1 ◽

pp. 1-23

Author(s):

Joongi Kim

Keyword(s):

Corporate Governance ◽

Financial Crisis ◽

Boards Of Directors ◽

Corporate Control ◽

Asian Financial Crisis ◽

Governance Framework ◽

Quantum Leap ◽

World Class

AbstractFollowing the 1997 financial crisis, Korea underwent a dramatic overhaul of its corporate governance framework. Drastic changes in its legal and regulatory infrastructure led to more transparent and accountable companies. Boards of directors, shareholders, stakeholders, and auditors began to function effectively and even a corporate control market emerged. Many forms of internal and external corporate governance and market-oriented discipline were established. Korean companies are poised to make a quantum leap to reach the most competitive international levels of corporate governance. This paper argues that Korea must continue its reform efforts. It first discusses the Asian financial crisis and the first stage of reforms that followed. It then explores the areas where Korea needs to undergo the next stage of reforms. It will argue that only then can Korean corporations receive proper valuations. Korean companies have indeed come a long way but lingering perceptions of weak corporate governance thwart them from becoming world-class competitors.

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Risk governance: Experience of Islamic banks

Risk Governance and Control Financial Markets & Institutions ◽

10.22495/rgcv5i2art4 ◽

2015 ◽

Vol 5 (2) ◽

pp. 31-40

Author(s):

Mat Rahim Siti Rohaya ◽

Fauziah Mahat

Keyword(s):

Risk Management ◽

Corporate Governance ◽

Structural Equation ◽

Committee Member ◽

Bank Lending ◽

Capital Adequacy ◽

Risk Governance ◽

Islamic Banks ◽

Loan Loss ◽

Cross Sectional

Risk governance has evolved tremendously in the banking industry. Risk governance recommends the imperative roles of Chief Risk Officer (CRO) to oversee risk. This study explores risk governance influence over the Islamic banks performances. Multivariate analysis techniques measure simultaneously via Structural Equation Modelling (SEM). This study employed cross-sectional sample of 200 Islamic banks across 21 countries for the year 2014. To examine risk governance and Islamic banks performance, the study captures seventeen variables developed from risk management and corporate governance (ROA, ROE, Profit Margin, CRO, Shariah committee member, CEO, board size, remuneration meeting, credit rating, external audit, accounting standard, loan loss provision, capital adequacy ratio, total deposit ratio, GDP, central bank lending rate and inflation). The simulation result reveals, risk governance act as mediating variables towards Islamic banks performance. This study has practical and significance contribution for Islamic banks to understand risk governance, aligning with the fundamental risk management and corporate governance.

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ANALYSIS OF IMPLEMENTATION OF THE GOOD CORPORATE GOVERNANCE PT. BANK BNI SYARIAH BRANCH OF TASIKMALAYA

Al-Infaq Jurnal Ekonomi Islam ◽

10.32507/ajei.v11i1.479 ◽

2020 ◽

Vol 11 (1) ◽

pp. 83

Author(s):

Setiawan Bin Lahuri ◽

Vina Fithriana Wibisono

Keyword(s):

Corporate Governance ◽

Content Analysis ◽

Data Collection ◽

Field Research ◽

Secondary Data ◽

Inductive Method ◽

Islamic Banks ◽

Islamic Perspective ◽

Good Corporate Governance ◽

Personal Character

PT. Bank BNI Syariah is one of the best Islamic banks, which obtained the best award as the most efficient bank and first ranked in the category of best good corporate governance report. So, this study aims to explore the extent of implementation of good corporate governance in PT. Bank Syariah Branch Tasikmalaya. This study is field research using the inductive method and content analysis approach. Data collection is using primary and secondary data through observations, interviews, and documentation. The results indicate that PT. Bank Syariah Branch Tasikmalaya has implemented good corporate governance principles by well according to the Islamic perspective. Described about it that bank has implemented “anti-graft” accordance with al-Amanah}-al-Jama>’ah}-al-Hasanah} as a slogan in doing work; al-Tawhi>d and al-Rid}a as the basis for forming personal character; every Dhuhur and Ashar prayer, the office is temporarily closed; Tarhib Ramadhan as routine program every June 19 by holding an MHQ competition.

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