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Shari'ah governance is a major part of governance of Islamic banking institutions (IBIs). Pakistan is the country where pioneering work on Islamic banking and finance has been conducted since 1970s. Major changes were made in 2002 and then in 2015 in the Islamic banking governance framework. This chapter critically analyses as to what extent the ‘shari'ah governance framework’ (SGF) introduced by the State Bank of Pakistan (SBP) in 2015 could be able to ensure compliance of Islamic banks' practices with the principles of shari'ah. The SBP, the regulator of banking system, has been doing its intensive efforts to ensure shari'ah compliance, and as such the SGF introduced by it is a good ‘case study’ on the subject. By applying the descriptive and analytical methodology, it examines the strengths and weaknesses and suggests how the gaps could be filled to make the SGF really effective for achieving the objective.

The purpose of this chapter is to review the risks Islamic financial institutions face in an emerging market context, including risk sharing in Islamic financing and Shari’ah (Islamic law) compliance risk. We explore current risk management practices and establish the link between risk management and the financial performance of banks and the efficiency and effectiveness of financial sectors in emerging markets. Because of their distinctive risk profile, Islamic finance institutions face challenges in risk management. We show that Islamic banking is riskier in emerging markets because of the presence of immature money markets, limitations in the availability of lender of last resort facilities, and deficiencies in market infrastructure. There is also no evidence that Islamic banks have developed effective solutions for managing the risks conventional banks face as well as their own unique risks. We suggest that the countries that do this best are those that prioritize the structure of risk management knowledge and capabilities in a single financial regulator.

Inquiring into the role of Islamic and conventional banks regarding the core responsibility of lending is an established phenomenon. This chapter is based on key findings regarding dynamic changes in the structural mix of credit portfolios in Islamic banks and conventional banks of Pakistan.

The nature of the study is exploratory; the sample consists of 5 Islamic banks and 20 conventional banks of Pakistan comparatively evaluated for the time frame of 2008–2014.

Our findings show that for Islamic banks, there is an increasing trend in the credit portfolios as a proportion to assets as well as to equity, whereas in case of conventional banks the findings are opposite. The results further prove a positive and negative growth of credit portfolios as proportional to assets and equity in case of Islamic and conventional banks respectively. It is also observed that credit portfolios of Islamic banks are growing with higher degree as a proportion to equity as compared to proportion to assets. On the other hand, conventional banks show higher degree of decline of credit portfolios as a proportion to equity as compared to assets.

These findings also show that primary stakeholders in Islamic banks are more risk seekers thus more inclined towards risky investments than ordinary credits.

The purpose of this study is to examine the effect of risk sharing and non-risk sharing instruments on both the profitability of Islamic banks and the economic growth of the country. This study also aims to improve the profit and loss sharing-based asset growth of Islamic banks.

The data for this study are obtained from the annual reports of all Islamic banks from Bangladesh using Bank scope database and annual report for the period of 1983–2014. The research uses Autoregressive Distributive Lag approach.

The findings reveal that risk sharing instruments are positively related to profitability and the economic growth of the country. This study also finds that non-risk sharing instruments play a predominant role in the profitability of the Islamic bank but are negatively related to the economic growth of the country.

Banks and other financial institutions need to pay greater attention to systemic risk created by risk transfer and apply risk sharing methods of financing more vigorously than has hitherto been the case.

This study will also contribute to the literature as relatively few Islamic financial literatures deal with the relationship between equity financing and profitability which may make a strong contribution to the area of Islamic finance.

The purpose of this chapter is to examine how the broader characteristics of Pakistan’s public policies reflect Islamic law, how the financial crime rate has been affected by policy rules, and if the policies do indeed reflect Islamic law, how do they help the process?

It is a qualitative exploratory study where structured interviews have been conducted with experts and practitioners in Islamic Ideological Council and Parliament.

The findings constitute a threadbare discussion of financial crimes which policy takes into account under Islamic law; along with the relevant ramifications and recommendations.

It is suggested that the laws of Pakistan be studied taking Shariah density into consideration. Future research can focus on implementation of laws and policies as a factor improving governance.

This study is pertinent because financial crimes in light of Islamic law and public policy are not discussed in detail in previous research.

This chapter provides a comprehensive investigation of the literature on sustainability reporting in Islamic banks using a content analysis of 200 English language articles published between 2000 and 2023. The data were collected from the Web of Science (WOS) database and analyzed using Bibliometrix in R software. This chapter addresses the trends of the most influential authors, institutions, countries, and research hotspots. This chapter fills one of the gaps in sustainability reporting literature, setting up a statistical description of the principal features of sustainable Islamic banking research and carrying out an analysis of its knowledge structure via bibliometric analysis. This chapter found that the number of articles on sustainability reporting in Islamic banks has increased over time; however, it is concentrated on a few core sources and authors, mostly related to Islamic finance, accounting, and ethics, as well as sustainability and social responsibility. The analysis of the co-authorship network shows a limited degree of collaboration between researchers from different clusters. The most productive and collaborative countries are Malaysia, the United Kingdom, and Pakistan, reflecting their well-developed and regulated Islamic banking industries that follow sustainability guidelines and frameworks. Moreover, the co-word analysis identifies 11 clusters and 43 keywords that represent the main topics and themes in the field, such as corporate governance, performance, disclosure, and risk. This chapter suggests some directions for future research and action on sustainability reporting in Islamic banks. This chapter contributes to the literature on sustainability in Islamic banking and the UN 2030 Agenda for Sustainable Development.

The prime difference between conventional and Islamic financial institutions (IFIs)is the compliance with shari'ah. Hence, shari'ah is a very crucial pillar, rather a main pillar of Islamic finance. In order to ensure shari'ah compliance by the IFIs at all levels, central banks of different countries crafted and implemented shari'ah governance framework. This chapter focusses on the cross-country comparison of shari'ah governance framework. The countries included in this chapter are Malaysia, Pakistan, the United Kingdom and Bahrain. The result shows that Malaysia and Pakistan are leading in terms of comprehensive shari'ah governance framework whereas Bahrain comes next and the United Kingdom is the last in terms of comparison.