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Open Access
Article
Publication date: 4 June 2021

Md. Kausar Alam, Fakir Tajul Islam and Mahfuza Kamal Runy

The purpose of this paper is to explore the question “Why is Shariah Governance Framework (SGF) important for Islamic banks?”

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Abstract

Purpose

The purpose of this paper is to explore the question “Why is Shariah Governance Framework (SGF) important for Islamic banks?”

Design/methodology/approach

A semi-structured face-to-face personal interview is used to accomplish the research objectives. This study has collected data from the concerned bodies related to Shariah Governance (SG) from the central bank and Islamic banks of Bangladesh.

Findings

This study states SG as a process of confirming Shariah compliance in the overall functions of the Islamic banks, while Shariah denotes some rules, regulations, guidelines, objectives and directions to enhance accurate functions and activities, which are solely based on Shariah principles. SGF is important for Islamic banks to implement Shariah principles, confirm Shariah compliance and monitor the functions of the banks. Besides, it is needed for a well, efficient, effective, profitable business and higher performance and, finally, to eliminate the confusion among the management, executives, conventional bankers and banks.

Research limitations/implications

This study significantly contributes to the national and global regulatory bodies by providing evidence that why do Islamic banks and financial institutions require a sound SGF. It is recommended that there should be a sound and robust SGF to protect and fulfill the interest, expectations and demands of different stakeholders, which can easily draw their attention, intention and interest.

Originality/value

This is the first research that extends the literature of Islamic banking and SG by highlighting the importance of SGF. This study claims that to be a complete Islamic bank as well as protecting the unique identity from the general banks and corporate governance system, SG manual is required.

Details

Asian Journal of Economics and Banking, vol. 5 no. 2
Type: Research Article
ISSN: 2615-9821

Keywords

Open Access
Article
Publication date: 9 March 2021

Md. Kausar Alam, Mohammad Mizanur Rahman, Mahfuza Kamal Runy, Babatunji Samuel Adedeji and Md. Farjin Hassan

The purpose of this paper is to examine the influences of Shariah governance (SG) mechanisms on Islamic banks' performance and Shariah compliance quality in the context of…

7542

Abstract

Purpose

The purpose of this paper is to examine the influences of Shariah governance (SG) mechanisms on Islamic banks' performance and Shariah compliance quality in the context of Bangladesh.

Design/methodology/approach

A semi-structured personal interview tactic was applied to accomplish the research objectives. The data were collected from the regulators, Shariah supervisory boards, Shariah department executives and Shariah experts from the Central Bank (Bangladesh Bank) and Islamic banks in Bangladesh.

Findings

The study discovers that the quality of the Board of Directors (BODs), Shariah Supervisory Board (SSB), management and Shariah executives have both positive and negative influences on the Shariah compliance quality, image, goodwill and performance of Islamic banks' in Bangladesh. The compositions, formations and quality of SSB and Shariah officers positively influence the Islamic banks' fatwas, Shariah decisions, compliance quality and firm performance. The study also finds that prevailing banking pressure, current political situation, the willingness of BOD and management and social limitations impact Islamic banks' performance, Shariah compliance quality, image and goodwill.

Research limitations/implications

Based on our findings, if the regulators, BODs and Islamic banks can manage effective and efficient executives, it will create a positive impact on Islamic banks' performance, image, goodwill and quality compliance. As the prevailing banking pressure, current political situation and social limitations hinder the functions and employment system of the Islamic banks as well as result the Islamic banks' image, performance, Shariah implementations and compliance. Thus, the theorist needs to consider these mechanisms in extending the agency, stakeholder and resource dependence theories.

Originality/value

This research extends the literature concerning the influences of Islamic banks' SG mechanisms in Bangladesh. The study also argued not only the efficient and effective mechanisms but also the prevailing banking pressure, current political situation and social limitations impact on Islamic banks' performance and Shariah compliance quality.

Details

Asian Journal of Accounting Research, vol. 7 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

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