Search results

This paper aims to examine the compliance status of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Financial Accounting Standards-1 and Islamic Financial Services Board (IFSB) Standard-4 by Islami Bank Bangladesh Limited (IBBL), recognizing the regulatory influence for complying with AAOIFI and IFSB standards and identifying the factors influencing the compliance with these standards.

The present study used content analysis approach for investigating the compliance status. The study considered IBBL as the only sample because it is the only Islamic bank in Bangladesh which is the member of both AAOIFI and IFSB. Hence, this paper investigated the compliance status of IBBL as a member of AAOIFI and IFSB. The study examined the annual reports of 2008-2012 as these were the latest and contemporary reports in 2013 when the study was conducted. SPSS software version 22.0 was used to analyze the data. A total of 203 items under 13 categories of AAOIFI standard and 133 items under 17 categories of IFSB standard were considered. Ordinary least squares was run to test the hypotheses of the study.

The study found that IBBL on an average complied 46.31 per cent of AAOIFI and 52.50 per cent of IFSB standards during the period, and importantly, IBBL did not comply some of the categories of required disclosures. The study also observed that size, as measured by total asset and number of branches, has a significant influence on compliance with IFSB standard, but not AAOIFI. The findings of the study depicted that IBBL did not reasonably recognize the importance of complying with AAOIFI and IFSB standards. Poor compliance or non-compliance with AAOIFI and IFSB accounting and reporting standards by IBBL exposed that the bank is not efficient in managing Shari`ah compliance risks, operational risks and transparent financial reporting. Therefore, recognition of the Shari`ah standards by the respective IFIs and a “regulatory push” is vital for improving the level of compliance with these standards.

The study considered IBBL as the only sample of the study because it is the only Islamic bank in Bangladesh which holds the membership of both AAOIFI and IFSB. The fiscal years 2008-2012 only were selected to evaluate the compliance status of the AAOIFI and IFSB standards in preparation and presentation of the financial statements of IBBL for comparative analysis because IFSB standard for accounting and disclosure was formulated in 2007; hence, the study could not evaluate the compliance status before 2008.

The study will help IBBL in identifying their limitations in complying AAOIFI and IFSB standards and also the regulators in designing the accounting and reporting frameworks in regulating Islamic banks in Bangladesh. The study would help IBBL in identifying the reasons for non-compliance, how improvement in compliance level may help the bank in mitigating Shari`ah compliance and operational risk and how new legal and institutional framework may improve the level of compliance with those standards.

The study observed that the AAOIFI and IFSB standards were set for increasing the level of Shari`ah compliance, but the compliance status showed that different classes of accounting and reporting were ignored from compliance by IBBL. This study will benefit the stakeholders in choosing a Shari`ah-compliant bank.

This is a unique study which considered both AAOIFI and IFSB accounting and reporting standards in evaluating the reporting compliance status of an Islamic bank and identified the influence of reporting compliance on managing Shari`ah compliance risks, operational risks and transparency. This study expects to instigate the Islamic banks in complying accounting and reporting standards for being Shari`ah-compliant.

Shari’ah is the foundation of Islamic banks. Although all the Islamic banks required complying with the Shari’ah requirements fully, the level of compliance differs among the Islamic banks. At the same time, Islamic banks have been performing well, but all do not demonstrate similar financial performance. This paper aims to explore whether Shari’ah compliance efficiency makes any difference in financial performance of Islami Bank Bangladesh Limited (IBBL).

This study used IBBL as a case. For exploring the issue of study, this paper applied an e-mail interview approach and interviewed 24 interviewees including financial analysts, IBBL clients and executives of regulatory bodies, the IBBL and other Islamic- and interest-based traditional banks. Interview opinions are then analyzed and interpreted for a deeper understanding of the topic.

The study observed that some other factors influence the financial performance of IBBL, but Shari’ah compliance is the dominant instinct of acquiring the leading position. Superior Shari’ah compliance creates internal strengths and external opportunities that facilitate IBBL in achieving higher financial performance. Most interviewees argued that Shari’ah is the only disposition that makes IBBL unique. Moreover, the bank that considerably follows Shari’ah gets better financial outcomes.

The study used a qualitative method using interview responses only for evaluating the relationship between Shari’ah compliance and financial performance. Further study may be conducted based on a quantitative approach.

This paper expects to uphold the significance of Shari’ah in improving the financial performance of IBBL and simultaneously motivating the parties associated with the Islamic banks in enhancing the level of Shari’ah compliance. Moreover, this study provides new insights into the importance Islamic banks and their performance in relation to the choice of customers.

This study explores the significance of Shari’ah compliance in creating avenues for greater financial performance and develops a model showing the ways how Shari’ah compliance leads Islamic banks to achieve higher financial positions.

This paper aims to establish whether Jaiz Bank Nigeria, Plc (JBNP) adopts the corporate social responsibility (CSR) practice and disclosure of Islami Bank Bangladesh (IBBL) as the latter provided managerial and technical assistance to the former.

The data were extracted from the annual reports and accounts of the banks from 2013 to 2017.

The study established that over the period, IBBL had clearly disclosed sector-wise CSR expenditures and the number of beneficiaries, such as humanitarian and disaster relief, education, health and environment, among others, for the welfare of the poor and the needy in the country. However, the CSR practice and disclosure of IBBL have not yet been adopted by JBNP. It only discharges CSR activities through its foundation called Jaiz Foundation, with unlawful income based on the doctrine of necessity, as approved by the Financial Regulation Advisory Council of Experts (FRACE) of the Central Bank of Nigeria (CBN). Further, the total amount to expend for CSR activities is located in the statement of sources and uses of charity funds.

The study covered only two Islamic Banks. Besides, only CSR aspects for the community service and development over five years were examined.

It is suggested that JBNP should adopt the CSR practice and disclosure of IBBL for the welfare of the poor and the needy in Nigeria.

Adopting the IBBL CSR practice and disclosure by JBNP would contribute to the minimization of the incidence of poverty in Nigeria.

This study, to the best knowledge of the researchers, is among the few of its kind that deeply evaluated the CSR expenditure of Islamic banks solely for the welfare of the poor and the needy of the society.

Today’s financial reporting inherits its origin in money, numbers and accounting dated back 7,000 years in Mesopotamia. The Italian Luca Pacioli, “first person to publish a work on double-entry bookkeeping”¹ is regarded as the father of accounting and bookkeeping. In USA, SEC issued its first Accounting Series Release which appeared to be Commission’s views on auditing and accounting, later, in 1982 has become known as Financial Reporting Releases. Today more than 100 countries permit publicly held companies to use International Financial Reporting Standards. This meteoric rise for use of financial reporting was due to a worldwide demand from regulators, lenders, trade partners, businesses, investors and policy makers. “The Companies Act of 1994 mandates requirement for financial reporting by all companies in Bangladesh.”² Banks’ reporting formats and disclosures in Bangladesh based on BAS 30 is similar to the requirements of the Companies Act of 1994. The research depicts how the two banking institutions of Bangladesh – Islami Bank Bangladesh Limited (IBBL) and Grameen Bank having two philosophical objectives – uniquely present their results of operation under a uniform financial reporting system and how they differ in their financial operations.

Defines an Islamic bank, notes their rapid growth in the last twenty years and explains the financial instruments they use to conform with the prohibition on interest. Considers how they might enhance both urban and rural development in Islamic countries, and the feasibility of an Islamic futures market. Describes the operations of the Islami Bank Bangladesh Limited (the first in SE Asia) and assesses its domestic and international performance, providing many statistical appendices. Recognizes some outstanding problems (e.g. suitable training, legal framework etc.) but believes the bank has great potential for assisting development and shows that “banking without interest is feasible”,

The purpose of this paper is to present an analytical justification from statistical view point about why Islam has strictly forbidden interest for the humankind.

It is a theoretical paper that looks into analytical views of justification in order to investigate the motivation of prohibiting interest.

The results of the paper suggest that interest has a great negative impact on the society, economy and morality of human beings. Analysis found some solid reasons which proved that interest has been really an evil system for the humankind and society as a whole for all times in the history of civilizations. On the other hand, from the statistical information given in the paper it was found that interest‐free financial institutions have been very successful in terms of their deposit, investment, foreign exchange business, financial stability and popularity as compared to the interest based financial institutions.

The impact of interest‐free financial institutions in development financing and in establishing sustainability of a welfare community remains a potential problem due to our shortage and/or lack of proper knowledge.

It is, therefore, very important to be aware of the exact stance of Islam on interest first. Then more extensive networking and complementary relations are needed among the financial and socio‐economic development goals in accordance with the tenets of the Islamic Shariah.

The paper shows its originality in substance and makes a unique contribution to the literature on systems and ethics.

The purpose of this paper is to investigate the impact of basel accord on the Bangladeshi bank performance including Islamic banks and the role of subordinated debt (sub-debt) as basel regulatory capital (BRC).

The authors conducted the empirical investigation by adopting a quantitative approach and using the secondary data available in the annual reports of the sample banks between 2009 and 2018. This paper develops an econometric model to compare and analyze the regression result under two states of capital-to-risk adjusted assets ratio (CRAR) with sub-debt and CRAR without sub-debt. This paper analyzes the impact of sub-debt in the largest Islamic bank for the year 2007 as a case study for endorsing the findings.

This paper finds that CRAR has positive alignments with return on equity (ROE) and cash dividend when sub-debt is considered as Tier 2 capital. This paper observes that the huge bad loan write-off supports to downsize the asset size thus temporarily enhance the return on assets (ROA). In a nutshell, sub-debt gives banks an ill incentive to disburse steady cash dividends instead of injecting genuine equity capital, encouraging them to take more credit risk. In fact, more private commercial banks (PCBs) issued huge sub-debts between 2009 and 2018 under a unique arrangement, which the authors termed as the “sub-debt trap.”

This paper draws policy implications for the banking regulator to identify and rectify a systemic problem of the “sub-debt trap” which hinders the regulatory purpose from the implementation of basel accord II and III. A limitation of this study is the authors shed analytical light on Bangladeshi banks, i.e. it a single country analysis which may not be generalized to other developing countries except matching with a similar context.

The paper contributes to accumulating empirical studies on the effectiveness of basel accord implementation in developing countries. In most of the developing countries, where institutional loopholes are a major concern, the research provides evidence that how weak institutional settings are largely responsible for harvesting the potential benefit from micro-prudential regulation such as the basel accord. To shed analytical light on developing country context, the study document that sub-debt has been instrumentalized to maintain minimum capital ratio and banks managers tends more focus on improving ROE instead of ROA. The findings of the study are supportive to other developing countries where sub-debt considered as BRC and issued through private placement. To the best of the authors’ knowledge, it is the first attempt to cast doubt on the impact of sub-debt as a BRC, given the uniqueness of the Bangladeshi banking industry, on the PCBs including Islamic banks.

Theological perspectives in ethics, values and their functional application in the real world are vividly covered by the theory and practice of Islamic banking in recent times. This paper seeks to formalize the theological paradigm of the unity of God (Tawhid) and to make the groundwork of unity of knowledge in the context of the money, finance and real economy linkages.Design/methodology/approach – The paper combines narrative with argument and analysis.Findings – On the basis of this the structure of the balance sheet of Islamic banks with no interest rate as an ethical condition of Islamic financing is delineated. This topic is followed by a discussion on the experience of Islamic banks in recent times in the area of mobilizing resources and gaining profitability, popularity and stability by the Islamic financing methods and the direct mobilizing of financial resources into the real economy. In this way, the Islamic banks are shown to attain the much‐needed complementary relations between social well‐being for clients and financial efficiency for the banks.Originality/value – Adds insights to the theory and practice of Islamic banking.

The purpose of this study is to investigate the impact of Islamic microfinance services (IMFS) on women’s empowerment in rural Bangladesh.

The study is based on a multi-stage sampling technique. The primary data are collected through a face-to-face survey of 389 women respondents who have received IMFS from the Islami Bank Bangladesh Limited. Cronbach’s alpha test is conducted to test the reliability and internal consistency of collected data. Paired-sample tests, logit regression and proportion hypothesis tests are conducted to measure the impact of IMFS on women’s empowerment. Descriptive and inferential statistics are used to interpret the data.

The study reveals that IMFS have led to structural transformation in the occupation dynamics of the respondents’ families from agriculture to retail businesses. IMFS have had a significant positive impact on household income, savings and expenditure; have improved standard of living and human capital formation; and have enhanced all three dimensions of empowerment, namely, economic empowerment (ECEM), socio-cultural empowerment (SCEM) and familial empowerment (FLEM). Of them, ECEM and SCEM have positively contributed toward overall women’s empowerment, while FLEM has a negative but insignificant impact on overall empowerment. The respondents’ perception also supports the finding that IMFS have benefited rural women and empowered them.

The study is based on primary data. It leads to an inquiry as to whether women are dominant in familial affairs. If so, it may reduce the state of happiness and overall women’s empowerment. There is a clear gap in the existing literature about this inquiry.

This paper describes a scheme which aims to alleviate rural poverty by providing small and microinvestment to the agricultural and rural sector for generating employment and to raise the income of the rural poor.

To assess the impact of rural development schemes on rural poor's livelihood, primary data were collected from 1,020 clients working across the country. Multistage random sampling method was followed to select the clients. Tabular, graphical, and econometrical methods were followed to analyze the data.

Results show that household income, productivity of crops and livestock, expenditure, and employment had increased significantly due to the influence of invested money. Results of the Logit‐model showed that clients' socio‐economic factors like age, number of family members in farming, total land size and clients' ethics and morals had a positive and significant influence on household income.

Client's opined that the microinvestment program had provided them with the opportunity to perform their economic activities in a more organized way, leading them to the higher quality of life and also develops their awareness towards health care, proper sanitation, and drinking safe water.

The paper recommends the replication of this program in other rural areas of the country with the increment of investment size, demand‐led effective training on different income generating activities and monitoring on more shariah compliance of the investment mode.