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JRFM
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Islamic Banking and Shari`ah Governance
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Islamic Banking and Shari`ah Governance

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Banking and Finance".

Deadline for manuscript submissions: closed (30 April 2022) | Viewed by 21642

Special Issue Editor

Dr. Md. Hafij Ullah

E-Mail Website
Guest Editor
School of Economics, Finance and Accounting, Coventry University, Gosford Street, Coventry CV15FB, UK
Interests: social and environmental accounting and reporting; pollutant accounting, reporting, and accountability; ethics and corporate social responsibility; Islamic accounting, Islamic banking and Shari'ah governance

Special Issue Information

Dear Colleagues,

Islamic finance has been flourishing throughout the globe. More specifically, more than 475 Islamic financial institutions are now providing financial services in 75 or more countries. Among others, Shari`ah compliance is the single most dominant factor behind those successes. Therefore, Shari`ah compliance has an impact on the financial and non-financial performance of Islamic service providers. Shari`ah is the foundation of Islamic finance; no new product or service can be initiated without an appropriate Shari`ah approval process. However, Shari`ah compliance differs between countries, organizations, cultures, and products. Various studies have argued that, in some cases, activities of the Islamic financial institutions are quite similar to traditional interest-based institutions. Understandably, there are some unavoidable constraints to Shari`ah compliance for the Islamic Institutions. Among others, those constraints include government rules and regulations, scarcity of Shari`ah experts, lack of appropriate Shari`ah governance framework, a dearth of research and profit motive, and inadequate understanding of Shari`ah compliance by their promoters and clients.

Considering the significance of Shari`ah compliance for Islamic financial institutions, this Special Issue of the Journal of Risk and Financial Management (JRFM) welcomes your contribution in these areas to explore further research, including but not limited to the following:

  • Factors determining Shari`ah compliance and effective Shari`ah governance
  • Shari`ah governance standard (AAOIFI and IFSB) and Shari`ah compliance
  • Constraints of Shari`ah compliance
  • Shari`ah compliance in traditional banks which provide Islamic services
  • Shari`ah compliance in the countries with Muslim and non-Muslim majority
  • Shari`ah compliance in Western countries
  • Shari`ah audit and the role of certification authorities
  • Individual and central Shari`ah Supervisory Boards (SSB)
  • Shari`ah compliance and the role of the Shari`ah Supervisory Board
  • Qualifications, expertise, appointment, responsibilities, and accountabilities of SSB members
  • Relationships between Shari`ah compliance and financial performance
  • Comparative Shari`ah compliance between Islamic organizations running in different settings

Dr. Md. Hafij Ullah
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Shari`ah compliance
  • Islamic Banking
  • Shari`ah Supervisory Board (SSB)
  • Financial performance

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Published Papers (5 papers)

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Research

22 pages, 4343 KiB  
Article
Shari’a Governance in Bahrain: Analysing the Islamic Banking Industry’s Implementation of the Newly Issued Regulatory Shari’a Governance Module
by Abdulrahman Al-Saadi, M. Kabir Hassan and Ahmed Mansoor Alkhan
J. Risk Financial Manag. 2022, 15(10), 418; https://doi.org/10.3390/jrfm15100418 - 20 Sep 2022
Cited by 2 | Viewed by 3224
Abstract
Shari’a governance is considered a crucial element of the Islamic banking industry. As recent as 2017, Islamic banks in the Kingdom of Bahrain were required by the regulator to have only a Shari’a Supervisory Board and an internal Shari’a function. In 2017, the [...] Read more.
Shari’a governance is considered a crucial element of the Islamic banking industry. As recent as 2017, Islamic banks in the Kingdom of Bahrain were required by the regulator to have only a Shari’a Supervisory Board and an internal Shari’a function. In 2017, the Central Bank of Bahrain issued a new Shari’a Governance module (SG) in its rulebook, requiring all Islamic banks to have at least two internal Shari’a departments instead of one, mandated external Shari’a auditing, and maintaining the necessity of having a Shari’a Supervisory Board. In this study, through an empirical enquiry, we analyse how the Islamic banking industry implemented this new module. The empirical results revealed that there seems to be an implementation gap between Islamic retail and wholesale banks, where the former have fully implemented the new Shari’a governance requirements, while the latter were given exemptions to postpone its implementation. Full article
(This article belongs to the Special Issue Islamic Banking and Shari`ah Governance)
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15 pages, 1142 KiB  
Article
Issues of Letter of Credit in Malaysian Islamic Banks
by Sharifah Faigah Syed Alwi, Ismah Osman, Mohd Bahroddin Badri, Amirul Afif Muhamat, Ruhaini Muda and Uzaimah Ibrahim
J. Risk Financial Manag. 2022, 15(9), 373; https://doi.org/10.3390/jrfm15090373 - 24 Aug 2022
Cited by 3 | Viewed by 6174
Abstract
This paper discussed the prevailing issues currently faced by Islamic banks on the offering of Letter of Credit (LC), originally brought forward by the International Chamber of Commerce, using Shariah contracts and puts forth recommendations on practical solutions to solve the issues. The [...] Read more.
This paper discussed the prevailing issues currently faced by Islamic banks on the offering of Letter of Credit (LC), originally brought forward by the International Chamber of Commerce, using Shariah contracts and puts forth recommendations on practical solutions to solve the issues. The study adopted a qualitative method where the information on the issues of Islamic LCs was gathered throughout interviews with different bankers closely involved in LC issuance from 12 Islamic banks in Malaysia. The results indicate that there are three vital issues related to LCs offered by Islamic banks which lead to Shariah non-compliance issues. The issues revolve around the conversion of LC Wakalah (agency) to LC Murabahah (cost-plus), the existence of a sale contract between the customer and exporter and lastly the title of goods stated in the bill of lading. The findings recommend several solutions in relation to LCs within the underlying Shariah contracts to ensure that their operation complies with the Shariah requirements and Malaysian laws, standards and regulations. This paper highlights the issues of Islamic LC yet to be discussed thoroughly based on the views of a panel of experts and Islamic bankers. Full article
(This article belongs to the Special Issue Islamic Banking and Shari`ah Governance)
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32 pages, 2971 KiB  
Article
Financial Crises and Business Cycle Implications for Islamic and Non-Islamic Bank Lending in Indonesia
by Samar Issa
J. Risk Financial Manag. 2022, 15(7), 292; https://doi.org/10.3390/jrfm15070292 - 30 Jun 2022
Cited by 2 | Viewed by 2429
Abstract
This paper addresses if and how excess debt can be considered as an early warning signal for banks and takes an additional dimension by comparing the excess leverage between Islamic and conventional banks in Indonesia before, during, and after the Global Financial Crisis [...] Read more.
This paper addresses if and how excess debt can be considered as an early warning signal for banks and takes an additional dimension by comparing the excess leverage between Islamic and conventional banks in Indonesia before, during, and after the Global Financial Crisis (GFC). To do so, this research develops an empirical model of banks’ capital structure and optimal and excess debt, and it conducts an empirical analysis on the overleveraging of eleven conventional and Islamic banks in Indonesia. Results show that all banks became vulnerable to the GFC in 2007–2009 while credit build-up, i.e., overleveraging, started in 2005. However, for most of the banks in the sample, Islamic banks performed better and leveraged less prior to the GFC, which made them more resilient to the crisis. Full article
(This article belongs to the Special Issue Islamic Banking and Shari`ah Governance)
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14 pages, 311 KiB  
Article
The Determinants of Investment Account Holders’ Disclosure in Islamic Banks: International Evidence
by Raoudha Saidani, Neila Boulila Taktak and Khaled Hussainey
J. Risk Financial Manag. 2021, 14(11), 564; https://doi.org/10.3390/jrfm14110564 - 22 Nov 2021
Cited by 2 | Viewed by 2894
Abstract
In this paper, we offer a novel contribution to Islamic accounting literature by examining the determinants of Investment Account Holder (IAH) disclosure in Islamic banks’ annual reports. Using data from Islamic banks around the world, our regression analysis shows that the level of [...] Read more.
In this paper, we offer a novel contribution to Islamic accounting literature by examining the determinants of Investment Account Holder (IAH) disclosure in Islamic banks’ annual reports. Using data from Islamic banks around the world, our regression analysis shows that the level of IAH funds, the return on IAH funds, adoption of AAOIFI standards, liquidity level, bank size and ownership have a positive significant relationship with IAHs’ disclosure level. Our findings can be useful for IAHs, regulatory bodies and information users in general as they help them to understand IAH practices in Islamic banks and the main incentives of managers to disclose IAHs’ information. The present study offers an original contribution to the Islamic accounting literature as it is the first one—to the best of our knowledge—that investigates the relationship between the specificities of Islamic banks and the extent of IAH disclosure. Full article
(This article belongs to the Special Issue Islamic Banking and Shari`ah Governance)
17 pages, 600 KiB  
Article
Development of Social Cost and Benefit Analysis (SCBA) in the Maqāṣid Shariah Framework: Narratives on the Use of Drones for Takaful Operators
by Amirul Afif Muhamat, Ahmad Farouk Zulkifli, Suzana Sulaiman, Geetha Subramaniam and Saadiah Mohamad
J. Risk Financial Manag. 2021, 14(8), 387; https://doi.org/10.3390/jrfm14080387 - 19 Aug 2021
Cited by 5 | Viewed by 5006
Abstract
Takaful operators are part of the Islamic financial institutions that are expected to achieve the commercial and social objectives by their stakeholders particularly the takaful participants (policyholders). First, this study aims to postulate a new framework to measure cost effectiveness by including the [...] Read more.
Takaful operators are part of the Islamic financial institutions that are expected to achieve the commercial and social objectives by their stakeholders particularly the takaful participants (policyholders). First, this study aims to postulate a new framework to measure cost effectiveness by including the social and economic benefits of drone-assisted technology in the context of maqāṣid Shariah. Second, the study intends to investigate how the takaful industry can benefit from the drone-assisted technology, particularly in terms of cost reduction. This paper presents an early finding that forms part of a bigger research project which is focusing on the use of drone for disaster victim identification (DVI). This study employs thematic analysis of qualitative research method by engaging key informants who are Shariah expert, drone practitioner and accounting expert. In the context of emerging economies like Malaysia, the adoption of drone is sporadic when some industries such as military and agriculture are quite experienced with it; but for the takaful sector is almost none. This study provides preliminary findings that suggests there is potential of cost effectiveness for drone usage from the perspectives of SCBA in the maqāṣid Shariah framework. The main contributions from this paper are: (1) the new SCBA framework derived from the maqāṣid Shariah perspective and, (2) the application of this framework in examining the cost effectiveness on the use of drones by the takaful operators especially during disaster. Full article
(This article belongs to the Special Issue Islamic Banking and Shari`ah Governance)
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