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Objectives of Islamic banks: a missive from mission statements and stakeholders’ perceptions

Ishfaq Ahmed (Hailey College of Commerce, University of the Punjab, Lahore, Pakistan)
Muhammad Musarrat Nawaz (Department of Commerce, University of the Punjab Gujranwala Campus, Gujranwala, Pakistan)
Rizwan Qaisar Danish (Hailey College of Commerce, University of the Punjab, Lahore, Pakistan)
Ahmad Usman (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan, Malaysia)
Muhammad Zeeshan Shaukat (Faculty of Business and Economics, Universiti Malaysia Sarawak, Kuching, Malaysia)

Journal of Islamic Accounting and Business Research

ISSN: 1759-0817

Article publication date: 12 June 2017

467

Abstract

Purpose

It is believed that the core aim of Islamic institution is idiosyncratic from conventional business entities. Considering this presumption, this study aims to reveal the understandings of various stakeholders about objectives of Islamic banks.

Design/methodology/approach

The research endeavor is based on the findings of two distinctive studies, where Study 1 was aimed at investigating the communication of objectives through mission statements of Islamic banks and conventional banks with window operations. Here, mission statements were analyzed using content analysis and readability and understandability tests. Study 2, on the other hand, was aimed at investigating the understandings of various stakeholders, both internal (employees) and external (Muslim and non-Muslim customers of both Islamic and conventional banks, employees and management of conventional banks and business students). In total, 370 responses were received and analyzed in this study.

Findings

The findings (Study 1) unveil, the fact, that the mission statements of Islamic banks working in Pakistan are not good at communicating the corporate goals clearly. Out of ten banks investigated for Study 1, it is evident that only one bank (HBL, with window operations) was at par with readability threshold standards. Thus, it was imperative to share that mission statements of Islamic banks are difficult to read and comprehend. Study 2 adds further by revealing that most of the stakeholders are not clear about the objectives of these banks, while customers of conventional banks do not value the distinctive objectives of Islamic banks.

Research limitations/implications

This study leaves a valuable message for the policy makers and top management of Islamic banks by focusing on the unattended part on their end, i.e. quality of mission statements and stakeholders’ perception about the objectives of their organization, thus highlighting the needs of greater emphasis on the communication flow to stakeholders, as the clarity of business purpose may change the way customers react toward the business and opt for banking – customer relation in future.

Originality/value

This study covers a multi-dimensional investigation of the understanding and communication of objectives of Islamic banks. There is dearth of literature focusing on the aspects of content analysis, mission statement readability and understandability and investigation of stakeholders’ perception in tandem.

Keywords

Citation

Ahmed, I., Nawaz, M.M., Danish, R.Q., Usman, A. and Shaukat, M.Z. (2017), "Objectives of Islamic banks: a missive from mission statements and stakeholders’ perceptions", Journal of Islamic Accounting and Business Research, Vol. 8 No. 3, pp. 284-303. https://doi.org/10.1108/JIABR-08-2014-0028

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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