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The purpose of this paper is to establish that financial crimes are unlawful (haram) in Islam and accordingly, the responsibilities of the Sharia's Supervisory Boards of Islamic financial institutions include the prevention and control of financial crimes.

The paper presents an analogy (qiyas) of the injunctions in the Qur'an and Sunna.

Financial crimes are prohibited in Islam as much as, if not more than, their prohibition by temporal laws.

The responsibilities of the Shari'a Supervisory Boards in ensuring “Shari'a‐compliance” on the part of the Islamic financial institutions include a wider ambit. It includes the prevention and control of financial crimes.

The paper provides additional dimension to Sharia's governance framework for the Islamic financial services industry.

The Islamic financial institutions (IFIs) maintain better control over their transactions than conventional financial institutions (CFIs) through the existence of Shari'a Supervisory Board (SSB) and Shari'a Control Department (SCD). The purpose of this paper is to highlight the superiority of Shari'a supervision over external audit and Shari'a audit over internal audit. The study identifies five independent variables that affect the SSB control: ex‐ante Shari'a audit; ex‐post Shari'a audit; SCD reporting to the SSB; corrective actions of SSB towards the management violations; and the number of SSB members.

The variables are articulated in five hypotheses, which are tested by ordinary least square regression. The data are collected via a questionnaire which was sent to the SSB members of 219 IFIs in the Gulf Cooperation Council (GCC) countries.

The results indicate that ex‐ante Shari'a audit, ex‐post Shari'a audit, and reporting of SCD are significantly related to the SSB control, whereas corrective actions and the number of SSB members have insignificant relation.

The research is focused on internal factors only, without considering other external factors such as stakeholders and regulators. Also, the research covered the GCC region alone.

The research recommends testing the hypotheses in other geographies to generalize the results, and including external factors as well as shareholders and board of directors.

The research provides practical implications for the SCD role and calls for merging the SCD with the traditional internal audit department to reduce the excessive work of controlling.

The paper contributes to the literature gap about the SSB. It is believed to be one of few studies that provide empirical evidence about the SSB control in the IFIs of the GCC region.

The purpose of this paper is to study the operation of Islamic banks and the elements which determine their performance.

In order to ensure the respect of Shari’a, religious committee of monitoring exists within the Islamic bank to take care of the conformity of the activities and banking products with the Shari’a. This paper supposes that corporate governance of Islamic banks imposes an important constraint on Islamic banks operations. Furthermore, the directors of the Islamic banks are subjected to the governorship exerted by the board of directors and the Shari’a board.

The findings of this paper are that the performance of an Islamic bank – as a company based on principles of Islam – is affected not only by the internal variables of quantitative nature (for example financial ratios) but also by the internal qualitative variables like the managerial variables. Moreover, the performance of an Islamic bank and a conventional bank should not be measured in the same way because of their divergence on the level of the objectives. The Shari’a member must have a qualification in finance and commerce to ensure better quality of supervision and consultation.

The findings of this paper are based on case studies from one country only (Bahrain).

This paper implies that in practice, members of Shari’a Board must have stature to give the bank credibility vis‐à‐vis the stakeholders and the depositors.

The original contribution of this paper is that it shows that the members of Shari’a board were a serious handicap for the directors of the Islamic banks. Directors and members of Shari’a board did not speak the same language. The members of the Shari’a board were not very specialized in the fields other than Shari’a and contrary the directors in Shari’a.

The governance structure of Islamic financial institutions (IFIs) implements Islamic canon law (Shari'a) into business transactions through Shari'a supervision processes. This paper aims to define Shari'a supervision and examine Shari'a supervisory councils (both within and outside the Central Bank), Shari'a consulting firms, Shari'a advisors, and Shari'a Supervisory Boards (SSB). It also discusses the importance of the hierarchical position of SSBs and evaluates their objectives and functions.

The paper reviews a wide range of theoretical literatures especially recent proceedings of relevant conferences in the Gulf Cooperation Council (GCC) countries along with the standards of the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI). A framework for understanding the role of the SSB is developed suggesting a set of objectives and functions for the SSB.

The paper finds a lack of standardization among the IFIs concerning the position of the SSB within the corporate hierarchy. Moreover, the SSB is found to control the IFIs activities more than the other types of Shari'a supervision such as Shari'a consulting firms and Shari'a advisors.

The research focuses exclusively on the GCC countries and excludes the other Middle East and Far East countries where Shari'a supervision might have different forms.

The research provides guidelines for IFIs in defining the SSB role in their governance structure and recommends the SSB among the other forms of Shari'a supervision (Shari'a consulting firms and Shari'a advisors) in controlling the IFIs activities.

This study contributes to the literature gap about the governance of IFIs. It is one of the first studies that provide a conceptual foundation for the SSB role in the governance structure of IFIs.

The purpose of this study is to identify the relation between the conflicts of interest in the Shari'a Supervisory Board (SSB) in the Islamic financial institutions (IFIs) and six independent variables: the SSB executive position, the SSB remuneration, the relation between the SSB members and the Board of Directors (BoD), and the multiple memberships in Islamic funds, issuers of Islamic bonds (Sukuk), and companies trading in capital markets.

The variables are articulated in six hypotheses and tested by ordinary least square regression. The data were collected via a questionnaire which was sent to the shareholders, the BoD, and the SSB members of all of the IFIs in the Gulf Cooperation Council (GCC) countries.

The results indicate that the SSB executive position, the relation between the SSB members and the BoDs, and the membership in Islamic funds and issuers of Islamic bonds are significantly related to the conflicts of interest, whereas remuneration and membership in companies trading in capital markets have insignificant relation.

The paper does not address the impact of SSB ownership in the IFIs, or the relation between the SSB and the shareholders, or the impact of the corporate governance codes on the relationship between the IFI and the SSB.

The study recommends testing the hypotheses in other geographies to generalize the results, and measuring the impact of the SSB ownership on the conflicts of interest as well as its relation with shareholders, regulators, and clients.

The paper provides practical implications to the SSB members and the BoD in the IFIs and calls for setting a maximum number of SSBs for each SSB member.

This study contributes to the literature gap of the SSB role in the governance of IFIs. It is believed to be one of first studies that provide empirical evidence about the SSB conflicts of interest in the IFIs of the GCC region.

The purpose of this paper is to define and explore the concepts and relationships between intellectual capital, knowledge, wisdom and corporate responsibility in the context of the corporate governance of Islamic financial institutions.

This paper presents an adaptation of the Nicholson and Kiel intellectual capital model of the board of directors including the role of the Shari'a Supervisory Board (SSB). It is driven by the following research questions: how does the SSB add value to the corporate governance model of IFIs through their intellectual capital? Is there any value in replicating the IFIs structure in western conventional banks and, if yes, how could it be done without the religious and cultural impacts?

It was only recently that one entered the knowledge economic era and organizations are slowly realizing the need and the benefits not only of managing knowledge better, but also of managing it in a wiser way. The concepts and values carried by Islamic banking and by social responsible investments have a lot in common and they both tend to bring wisdom to the organization's operations and goals.

This paper explores how the core concepts of Islamic banking governance could be adapted to conventional banking. It shows the need for organizations to continue their knowledge management journey by integrating organizational wisdom with their decisions and actions. Corporate social responsibility is perceived as being a first step to reach organizational wisdom. This paper touches on various critical issues and it is hoped that it will be a source of inspiration for numerous research questions and debates on these topics.

This paper aims to examine the extent of the Shari’a corporate governance disclosure in the annual report of Islamic financial institutions (IFIs) in Malaysia to determine the significant differences in this disclosure between the local and foreign-owned IFIs, small and large size IFIs and IFIs belong to Islamic and conventional holding companies.

All 16 IFIs in Malaysia were selected to analyse the extent of disclosure in their annual reports on issues related to Shari’a corporate governance. For this purpose, an index of Shari’a corporate governance disclosure for IFIs was created based on adapting Sulaiman et al. (2015). The index consists of 127 items classified into 14 dimensions. The scoring of the disclosed items is binary, where a score of “1” if disclosed and “0” if it was not disclosed in the annual report.

The result shows no significant differences in the Shari’a corporate governance disclosure between the local and foreign-owned IFIs, small and large size IFIs and IFIs belonging to Islamic and conventional holding companies. However, further examination shows that there was a significant difference in the disclosure of the risk management committee dimension between the large and small IFIs and investment account holders dimension between the conventional and Islamic holding companies.

The results provide new emerging evidence that deviates from many prior empirical research studies, which document the domination of Islamic-based IFIs in the corporate governance practices, as compared with their conventional financial institutions that venture into Islamic finance. This study, however, was conducted on only 16 IFIs in a one-year period, i.e. 2013. Future research should consider data from a larger number of IFIs that involve a number of countries with more than one year of data to have a better understanding of the extent of Shari’a corporate governance disclosure.

This study provides an indicator to the stakeholders of Islamic finance that the Islamic-based IFIs and conventional IFIs are equal and cannot be differentiated based on the Shari’a corporate governance disclosure. For Islamic-based IFIs, as a pioneer in Islamic banking and finance industry, they need to take more efforts in adopting the Shari’a governance framework issued by the Central Bank of Malaysia (BNM), namely, the Shari’a review, audit and risk management.

This study is original, as it includes the latest requirements by the Shari’a governance framework issued by the BNM, namely, the Shari’a review, audit, risk management and research functions in its research instrument. In addition, this research also scrutinised the disclosure in detail of all the dimensions constructed in the governance index.

This study aims to examine the influence of Islam on corporate social responsibility (CSR) and corporate social responsibility disclosure (CSRD) in Islamic financial institutions (IFIs) with a focus on an analysis of narrative reporting.

Using content analysis, this study analyzes the narrative disclosures of corporate social responsibility of 21 IFIs operating in the Gulf region.

This study provides evidence of Islamic influence on the CSRD of IFIs. It finds that the largest part of CSRD produced by the IFIs is the disclosure of reports of the Shari'a Supervisory Board. IFIs also disclose other Islamic information (e.g. “Zakah” and charity donation, and free interest loan) and report on their compliance with Islam along with information of philanthropy, employees and community.

This study provides a valuable contribution to researchers and practitioners, as it extends the understanding of how the narrative disclosures on CSR were produced by IFIs and the influence of religion on CSRD.

The purpose of this paper is to examine the influence of Islam on corporate social responsibility disclosure (CSRD) in Islamic financial institutions (IFIs).

Using the content analysis approach, the paper examines the influences of Islam on CSRD by looking into the annual reports of 21 conventional financial institutions (CFIs) and 21 IFIs operating in the Gulf region.

The results show significant differences in the level and the extent of the disclosure between IFIs and CFIs, largely due to the disclosure made by IFIs of religions related themes and information, including Shari'a supervisory board reports, the “Zakah” and charity donation, and free interest loan.

This paper's contribution to the literature is twofold: the paper reveals the actual difference of CSRD between IFIs and non‐IFIs, by comparing the disclosures made by IFIs and non‐IFIs; and the paper identifies the extent of influence of Islam upon the CSRD of IFIs.

The purpose of this paper is to examine and illustrate how a relatively young Islamic financial institution has successfully gone international. Despite the fact there are many larger financial institutions in the Arabian Gulf, they either failed to identify the opportunity or were reluctant to go international. But Arcapita seem to have capitalized on this apparently untapped niche market in the international arena through its unique policies and strategies.

Relevant data and literature have been collected from publicly available sources. Basic company information was collected from company annual reports, press releases, and web sites. The Bankscope database has been used to generate the bank's comparative financial performance.

Islamic Investment banking is a relatively new development. This is essentially a niche market and Arcapita has not only identified this opportunity but also has become internationally successful within a short period of time. The case illustrates how the company raises funds from the Middle East region and then invests in the USA, Europe, the Middle East and Asia.

Being the first of its kind in conforming to the Shari’a Principles (Islamic Law) fully in its business, Arcapita's progress to date is quite spectacular. This comprehensive teaching case study provides the company history and background, as well as insights into its operational and organizational realities, strategies and management practices. Academics, students and practitioners from the region and beyond will find this case study interesting and useful.