This study aims to describe the role of knowledge diffusion in evolving governance principles for Islamic banking.
This study develops a discursive theoretical debate using the discourse analysis method on the Sharīʿah principles related to interest (Riba), excessive uncertainty (Gharrar) and profit and loss sharing and their convergence with the conventional banking principles of profitability, solvency and liquidity.
The study proposes a novel framework that describes how knowledge diffusion bridge-up the Sharīʿah and banking principles in terms of integration of banking principles by Sharīʿah scholars, integration of Sharīʿah principles by managers and the resultant, emergent principles for the governance of Islamic banking.
The proposed framework can inform professionals on how knowledge of banking practices and Sharīʿah can help them in governing Islamic banking. The Board of Directors may adopt a holistic approach for encouraging enhanced interactions between Sharīʿah scholars and managers. Such interaction may be increasing harmony, reducing conflicts and better coordination resulting in Sharīʿah-compliant and market wise viable products and services, thus increasing banking profitability.
This is the first study, which acknowledges and illustrates the role of the knowledge diffusion process in evolving governance principles for Islamic banks. This paper contributes to the theory of corporate governance by using the knowledge, aptitude and practice theory lens to examine conceptually how Islamic banking governance principles emerged through the knowledge diffusion process.
Malik, A., Ullah, K., Jan, S., Atiq, M. and Abdullah, A. (2021), "The role of knowledge diffusion in evolving governance principles for Islamic banking", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 14 No. 4, pp. 835-850. https://doi.org/10.1108/IMEFM-07-2020-0325
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