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This chapter summarizes the current practice of shari'ah governance framework of Islamic banking entities (IBEs) in Oman and the challenges faced by such institutions. The Central Bank of Oman (CBO) issued proper shari'ah governance framework enshrined in the Islamic Banking Regulatory Framework of CBO. The shari'ah governance framework shall contain shari'ah supervisory board, internal shari'ah reviewer, shari'ah compliance unit, shari'ah risk unit, and shari'ah audit unit. To strengthen the role of shari'ah, the CBO also issued a regulation for the establishment of High Shari'ah Supervisory Authority in CBO to harmonize opinions related to shari'ah matters among the IBEs. These elements are expected to perform an oversight role on shari'ah matters relating to Islamic banking business activities. This chapter also discusses the issues and challenges faced by IBEs in Oman, and proposed some improvement to the CBO to strengthen shari'ah governance framework in the Sultanate.

The purpose of this paper is to survey the viewpoints of various stakeholder groups on the philosophy and objectives of Islamic banking, particularly in a dual banking environment, as in the case of Malaysia.

The paper presents primary data collected by self‐administered and postal questionnaires involving a sample of 1,500 respondents representing seven stakeholder groups, namely customers, depositors, local communities, Islamic banking managers, employees, banking regulatory officers and Shariah advisers. An exploratory factor analysis is employed to examine the respondents' perceptions towards various objectives of Islamic banking.

This paper reveals that respondents regard Islamic banking as an institution that should uphold social objectives and promote Islamic values towards their staffs, clients and the general public. Other factors perceived to be important include contributing to the social welfare of the community, promoting sustainable development projects and alleviating poverty.

The empirical evidence of this paper affects two aspects; first Islamic banks must not be solely profit‐driven entities; rather they must aim at promoting Islamic norms and values to achieve the economic objectives as prescribed by Shariah (Islamic Law). Second, true success for Islamic banking participants depends on the extent to which they can integrate social goals with the mechanics of financial innovation. This research will be of interest to both incumbent and potential entrants into this niche market.

The paper reports findings from the first nation‐wide survey of diverse stakeholder groups in the area of Islamic banking and finance.

The aim of this paper is to empirically test the presence of the bank lending channel for the Islamic banking system in Malaysia.

Distributional effects from monetary policy changes were analyzed by three bank characteristics such as size, liquidity and capital. Using the econometric model by Kashyap and Stein (1995), the implementation of a policy contraction leads to reduction in loan supply because some banks may not able to offset a reduction in deposits. The paper explores the response shown between domestic and foreign Islamic banks in Malaysia using bank-level data from 2005 to 2010.

The empirical result indicates presence of the bank lending channel in the Islamic banking system in Malaysia, size and liquidity as sources of difference response of financing supply in domestic bank and capital for foreign Islamic bank and Islamic interbank rate as an efficient tool in conducting monetary policy especially in the Islamic banking system.

The paper manages to explore the effectiveness of Islamic the monetary policy tools in the Islamic Banking system in Malaysia. Using Islamic interbank rate as a policy tool, it provides valuable view to policy makers, who are analyzing for efficiency of transmission channel.

The purpose of this paper is to find out whether profit‐and‐loss‐sharing (PLS) modes of finance have become viable financial alternatives for entrepreneurship and enterprise development or whether they are still merely an academic endeavour.

The method employed in this study is a combination of extensive examination of existing literature and critical analysis of the outcomes of several relevant studies in order to establish the convergent/divergent relationship between theory and practice in Islamic finance.

Based on available bank level and country level data, the paper presents evidence that the divergence between the theoretical perspective and the practical implementation of PLS modes of finance is widening to an alarming level. The paper argues that this divergence by no means can be attributed to the construct and the disposition of the PLS instruments; it is rather the product of the negative attitude and the lack of proper infrastructure of the majority of Islamic financial institutions (IFIs) – and their (reluctance) to accommodate entrepreneurship through the genuine implementation of PLS instruments.

The findings of this study draw attention to the visible shortage in practical research pertaining to the application of the principles of PLS modes in financing entrepreneurial activities. The study suggests that the relevance, the direction and the resilience of future research undertakings should be focused on bridging the increasing gap between the prescribed role of PLS instruments and the actual performance of IFIs in promoting socio‐economic development through the creation of a vibrant entrepreneurship sector.

The paper points out that while PLS models dominate the theoretical literature on Islamic finance, and whereas the majority of mainstream Muslim scholars and financial authorities overwhelmingly judge PLS models as being compelling financial options and practical developmental tools, the reality of Islamic finance paints a different picture. The paper emphasizes the need for IFIs to conform to their own charters and assume a leading developmental role in order to realize al‐Shariah objectives (maqasid al Shariah). The paper identifies key research areas that warrant the attention of keen researchers with interest in the field of Islamic finance and entrepreneurship development.

It is believed that Islamic banks are aimed at the welfare of its stakeholders (Dusuki, 2008). The major stakeholders consist of customers, employees, competitors and management. But whether the Islamic banks are really able to communicate and convey their mission to their stakeholders is an area which has not be given due importance. This paper aims to attempt to unveil this issue.

This study comprised two distinctive methodological stances, where mission statements of selected (five) Islamic banks were analyzed using content analysis, readability and understandability in first instance. In second step, various stakeholders responded for their perception of objectives of stakeholders through personally administrated questionnaires. In all, 370 respondents recorded their responses in this stage.

Findings of the study show that Islamic banks are not well in communication to their objectives through their missions statements. Moreover, most of the stakeholders are not clear about the objectives of Islamic banks.

This study is first of its type which covers content analysis, mission statement readability and understandability and perception of stakeholders in one study.

Establishes that, in Singapore, which has a minority of Muslims in its population, both Muslims and non‐Muslims are generally unaware of the culture of Islamic banking. Also the two separate groups have different attitudes towards the Islamic banking movement, with the degree of difference depending on the nature of the respective matter put to them. For example, when asked what they would do if an Islamic bank did not make sufficient profits to make a distribution in any one year, 62.1 per cent of Muslims said they would keep their deposits within the Islamic banking movement, while 66.5 per cent of non‐Muslims said they would withdraw their deposits. In relation to bank selection criteria, there was general accord as between Muslims and non‐Muslims on the rating of the various criteria. Five significant differences were noted, the most relating to “being paid higher interest on savings”. The desire to be paid higher interest was far stronger with non‐Muslims.

This study aims to analyze IFIs’ stakeholders’ perception on Shariah harmonization for financial reporting standards inIndonesia as a part of the development effort of linking the emerging global Islamic banking to Indonesian financial and industrial markets.

A sample of 160 respondents, who were stakeholders of Islamic banks, was taken from Jakarta, the capital city of Indonesia and its surrounding major districts to examine the stakeholders’ perception on Shariah harmonization effort toward the implementation of a uniformed financial reporting standard for Islamic financial institutions. Data for this study were collected using a structured questionnaire.

Through this study, the authors found several measures to be taken to ensure Shariah harmonization efforts in Indonesia such as deep understanding on the fatawā brought into practices and strict monitoring on the Islamic banks in applying the financial reporting standards that imply practicing the fatawā, both de jure and de facto. However, the respondents differ in their opinion on the possibility of Shariah harmonization, both de jure and de facto. The role of various actors involved in the financial reporting standardization may impede Shariah harmonization to take place.

The study is only looking at one case study, which is Indonesia. Therefore, future studies should consider more countries and significant number of respondents. Different research instruments to measure the perception can also be an interesting research exploration. In addition, adopting deep Islamic political economy of accounting theory may support better analysis on the issue of financial reporting standardization for Islamic financial institutions.

This paper has practical significance for financial reporting standard setters for Islamic banks and policy-makers to understand the key behavioral and demographical dimensions of their stakeholders and using these dimensions to effectively position important aspects in financial reporting standards setting.

The purpose of this paper is to investigate Malaysian practitioners’ general perspective on corporate social responsibility (CSR) of Islamic banks and their views on having a special CSR framework.

This study used semi-structured face-to-face interviews, which contained both qualitative and quantitative data. The study also used observation and document review to support the data drawn from the research participants whenever necessary.

In total, 34 practitioners from all 16 Islamic banks in Malaysia responded to the interview questions designed for this purpose. The results show that the majority of the research participants viewed positively that Islamic banks should have a special CSR framework.

The Islamic concepts of CSR will be of interest not only to academicians but also, especially, to Islamic financial institutions. This paper will also send a strong signal to regulators that they should develop and introduce an Islamic CSR framework to Islamic financial institutions, especially Islamic banks.

This paper contributes to the growing debate on CSR among Islamic financial institutions, especially in the Islamic banking industry, by investigating practitioners’ views on having a CSR framework. In addition, to the knowledge of the authors, this is the first research that has involved Chief Executive Officers, Heads of Shari’ah, and Heads of Corporate Communications as research participants to talk about the CSR of Islamic banks.

Islamic banking as a financial institution has always been proclaimed to be different from conventional banking systems. This is mainly due to the prohibition of interest and emphasis on achieving social economic responsibility in society. However, in practice, Islamic banking practices in the UK seem to be far away from its paradigm version. The main purpose of this study is to evaluate user perceptions of Islamic banking practices in the UK.

To explore the understandings and perceptions of customers about Islamic banking practices in the UK an online questionnaire survey is used as the research approach in this study. The survey was conducted through a closed‐ended structured questionnaire.

The overall findings of this study suggest that Islamic banking in the UK is not fully aligned with the paradigm version of Islamic finance. The respondents generally agree with the view that the principle of profit and loss sharing element represents the true spirit of Islamic banking practices, however, due to the complex nature of Islamic banking products, they are unsure about the full benefits of this system. There is a high expectation among the respondents about the commitment and strong welfare role of Islamic banks in society. It is therefore suggested that through research, effective marketing and generating more awareness in users about Islamic finance, it is possible to achieve more from the Islamic banking paradigm.

This study is not only relevant to Muslims, but also to the banking regulators in the UK, as many conventional banks are now offering Islamic products and services alongside their routine interest‐based transactions. Hence there is a need for the regulators to understand the real nature of such practices by both the Islamic and conventional banks and establish a uniform regulation so that users are not ill‐treated by banks in the UK.