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Article
Publication date: 30 October 2023

Yusuf Karbhari, Abdelhafid Benamraoui and Ahmad Fahmi Sheikh Hassan

The study applies Erving Goffman's (1974) “frame analysis” principles to examine how Sharia governance is practiced in Islamic banks and explores the interaction and strategies…

Abstract

Purpose

The study applies Erving Goffman's (1974) “frame analysis” principles to examine how Sharia governance is practiced in Islamic banks and explores the interaction and strategies adopted by bank managers to influence the decisions of Sharia scholars. The study also aims to identify inherent flaws in the Sharia compliance review system.

Design/methodology/approach

The study employs the principles of Goffman as a lens to critically analyse a rich dataset obtained through interviews undertaken with 46 key players operating in the governance framework of the Malaysian Islamic banking industry due to its progressive Islamic governance framework.

Findings

The study demonstrates that managers of Islamic banks may engage in “passing” and “covering” strategies while interacting within the governance structure. Concurrently, Sharia boards (SBs) implement “protective practices” during their interactions, adding complexity to their responsibilities within the banks. Consequently, SBs cannot merely be viewed as instruments for legitimising banking operations. This raises questions about the “impression management,” “concealment” and “competence” strategies employed by managers and SB members, as suggested by Goffman's framework. These findings indicate that there is room for further enhancement in the governance practices of Islamic banks.

Research limitations/implications

Future research could explore aspects related to the governance of Islamic banks, such as investigating the independence and effectiveness of internal Sharia officers. Examining the strategies employed during their interactions with external Sharia boards and other stakeholders could provide further valuable insights.

Practical implications

By highlighting shortcomings in the governance and compliance review process, the findings could serve as a valuable resource for policymakers. The insights derived could inform the development of regulations aimed at reducing opportunistic behaviour and promoting accountability in the Islamic banking sector.

Originality/value

This study uniquely employs Goffman's concepts of “frontstage” and “backstage” strategies to offer insights into the interactions between Islamic bank managers and SBs and the impact of these interactions on Sharia compliance. The study contributes to the understanding of the dynamics between key players in the governance of Islamic banks and the factors influencing their adherence to Sharia principles.

Details

Accounting, Auditing & Accountability Journal, vol. 37 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 30 April 2024

Nurfarahin Mohd Haridan, Ahmad Fahmi Sheikh Hassan and Sabarina Mohammed Shah

This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks…

Abstract

Purpose

This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks (IBs).

Design/methodology/approach

From 11 well-established Malaysian IBs, 16 internal auditors were interviewed to provide an in-depth understanding on how ESA can provide greater assurance to stakeholders in Malaysian IBs.

Findings

This study reported mixed acceptance from internal auditors on the proposed additional governance layer to be undertaken by the ESA. Generally, internal auditors reluctantly agreed that Shariah auditing by the ESA would enhance the quality of Shariah assurance but maintain several practical concerns regarding lack of guidelines on Shariah auditing, the additional cost to be borne by IBs and the possible tensions between the ESA and Shariah board (SB) amid the diverse Shariah interpretations available for experts in the field.

Practical implications

The critical point on the manifestation of an ESA in the contemporary IB practice brought by this study highlights the need for regulation and policy promulgation that embrace a comprehensive approach to Shariah audit process within the religio-ethical dogma of Islamic banking and the pragmatic approach to banking.

Originality/value

This study provides evidence on the expected role and competency of an ESA and explores the implications produced by its implementation in Malaysian IBs. This study also clarifies how IBs should delineate the role of Shariah assurance from SB to ESA.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

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