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Article
Publication date: 11 January 2021

Nourhen Sallemi, Rim Zouari Hadiji and Ghazi Zouari

This paper aims to examine the effect of governance mechanisms (board size, board independence, duality, the Sharia board size, Sharia board meetings and ownership…

Abstract

Purpose

This paper aims to examine the effect of governance mechanisms (board size, board independence, duality, the Sharia board size, Sharia board meetings and ownership concentration) on the performance of insurance providers of distinguishable Muamalah contracts (wakalah and hybrid), moderated by the length of senior leaders’ servicing time.

Design/methodology/approach

The full sample includes 21 listed Takaful companies divided into two subsamples – 12 insurance wakalah contracts offered in the South East Asian (SEA) countries and 9 insurance hybrid contracts offered in the Gulf Cooperation Council (GCC) countries over the period of 2012–2018. The methodology is informed by Baron and Kenny’s (1986) moderation process approach.

Findings

The results of this study indicate that the larger the size of directors’ board and the higher the number of outside directors, the greater the SEA wakalah Takaful insurance performance. Nondual functions and a larger size of Sharia board along with a highly-concentrated ownership structure have a positive effect on the Takaful insurance performance in both the SEA and GCC regions. Furthermore, the higher the Sharia board meetings, the higher performance of all types of Takaful insurance providers in the sample. As for the moderating effect of the director’s seniority, it is found to negatively moderate the relationship between the governance mechanisms and the Takaful performance in both regions.

Originality/value

This paper highlights that the leader’s entrenchment stands as an obstructing factor impeding the governance mechanisms from enhancing Takaful performance. Thus, it serves to contribute to clearly understanding the appropriate governance mechanisms usefully fit for a Takaful insurance effective performance, applying the wakalah and hybrid contract types. Such a contribution should be appreciated by the concerned regulators engaged in setting up limited serving periods for the directors whereby the Takaful insurance practice could be efficiently managed and supervised.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

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Book part
Publication date: 20 May 2019

Abstract

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

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Book part
Publication date: 20 May 2019

Mohd Hairul Azrin Haji Besar

In this chapter muamalah contracts are developed through the derivation of the respective rules from the requirement of shari'ah, not only avoiding the prohibited items in…

Abstract

In this chapter muamalah contracts are developed through the derivation of the respective rules from the requirement of shari'ah, not only avoiding the prohibited items in commercial transaction but at the same time enforcing the rights of parties to the contract in accordance with the contractual needs. Thus, these contracts safeguard the parties from being victim of the other in pursuing their commercial gains. The study examines the requirement of mudarabah and musyarakah contracts in the context of the relationship between shareholders and corporation as a foundation of a sound corporate governance mechanism. It is derived that the muamalah contracts if applied in its true nature are capable of defining and protecting the rights of all parties ridding crucial corporate governance concern which are mostly incited by the distrust of the parties in the running of the corporation and generation of benefits.

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

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Article
Publication date: 18 July 2019

Tria Yulia Rahmawati, Miranti Kartika Dewi and Ilham Reza Ferdian

This study aims to explore Instagram’s role in management practices of Islamic banks, particularly in Indonesia. The facts that presently Instagram is one of the…

Abstract

Purpose

This study aims to explore Instagram’s role in management practices of Islamic banks, particularly in Indonesia. The facts that presently Instagram is one of the fastest-growing social media platforms globally and Indonesia has the fourth highest number of Instagram users make this study increasingly relevant to observe how Instagram assists businesses in training trust by engaging users through visual content.

Design/methodology/approach

A comparison and an analysis of nine Indonesian Islamic banks’ use of Instagram was conducted, considering whether Instagram can potentially serve as a low-cost channel to promote the products and services of Islamic banks to a broader audience, including strategies that work/do not work well to be applied in managing the banks’ Instagram accounts. This aim also aligns with Islamic banks’ desire to boost market share, particularly in Indonesia, which has the largest Muslim population globally.

Findings

In the course of qualitative research, this study finds that the nine Islamic banks use Instagram for marketing and promotional activities, which boosts engagement with current and potential customers, provides better information access and promotes the banks’ brand identity publicly. Despite these achievements, most Indonesian Islamic banks still tend to use Instagram as a one-way rather than a two-way communication channel, reflecting the findings of previous studies.

Originality/value

There is little guidance about social media’s role in management practices of financial institutions in general and even less for Islamic banks; hence, we summarize how Islamic banking practitioners and business leaders use Instagram to enhance public engagement. Furthermore, because Islamic banks have unique characteristics that distinguish them from their conventional counterparts, we also review aspects of Sharia-related compliance related to social media use (particularly Instagram) at Islamic banks.

Details

Journal of Islamic Marketing, vol. 11 no. 4
Type: Research Article
ISSN: 1759-0833

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Book part
Publication date: 20 May 2019

Abdurrahman bin Abdulaziz Alaqil

This chapter aims to provide the fundamental grounds in shari'ah for corporate governance. It searches the main sources of Islamic teachings around the main pillars for…

Abstract

This chapter aims to provide the fundamental grounds in shari'ah for corporate governance. It searches the main sources of Islamic teachings around the main pillars for corporate governance and describes the basic norms built for the foundation of corporate governance in the Islamic framework. This chapter also provides numerous original evidences linking principles of corporate governance to the main objectives of shari'ah. In the end, this chapter presents the review of the included chapters in the current volume.

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

Keywords

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Article
Publication date: 20 June 2016

Permata Wulandari, Niken Iwani Surya Putri, Salina Kassim and Liyu Adikasari Sulung

The purpose of this paper is to measure the pattern of contract agreement process to map various banks’ position in perceiving Sharia conduct. This is done by…

Abstract

Purpose

The purpose of this paper is to measure the pattern of contract agreement process to map various banks’ position in perceiving Sharia conduct. This is done by incorporating the dynamics of culture, market demand and Sharia literacy in different banks. Finding of this research will serve as the formula to map the latent degree of Islamic bank’s commitment to their strategic vision and identity as an Islamic-based financial institution.

Design/methodology/approach

This research develops its theoretical background in classical and contemporary literature review on murabahah contract in Islamic perspective. Focus group discussion (FGD) and in-depth interview are conducted on 32 bankers (in 14 Islamic banks), two National Sharia Council, five academicians and three central bank representatives as an input for qualitative analysis. Content analysis is utilized in this paper to emphasize the process of discovering the relationship between dynamic factors affecting contract agreement process in murabahah scheme in Indonesian banking.

Findings

There are four dimensions affecting the contract agreement: fairness to customer, country regulation, perceived business practicality and product characteristic. The four dimensions are assumed to be influenced with categories proposed, as the category item is mostly repeated and is perceived to be significant in the participant’s perspective.

Originality/value

This research will be beneficial in mapping the determinant of degree of Sharia compliance in Sharia banking in Indonesia, focusing on the contract agreement process.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 9 no. 2
Type: Research Article
ISSN: 1753-8394

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Book part
Publication date: 20 May 2019

Abstract

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

To view the access options for this content please click here
Article
Publication date: 11 November 2019

Liza Nora

The purpose of this paper is testing customer’s knowledge on customer intimacy and its impact on repurchase intention, specifically to Bank Muamalat’s customers in…

Abstract

Purpose

The purpose of this paper is testing customer’s knowledge on customer intimacy and its impact on repurchase intention, specifically to Bank Muamalat’s customers in Jakarta, Indonesia.

Design/methodology/approach

This research was conducted at sharia bank with research subject that is a customer of Bank Muamalat reasons to choose Bank Muamalat as a representative of other sharia banks as a place of research because it is the first sharia bank in Indonesia and more experienced in implementing sharia practices. The branch offices approved as research sites are only seven branch offices (Panglima Polim, Slipi, Tanah Abang, Kemayoran, Mangga Dua, Buaran and Kalimalang) in five areas of DKI Jakarta (Central Jakarta, West Jakarta, South Jakarta, East Jakarta and North Jakarta). Respondents at the seven branch offices are considered to represent customers of Bank Muamalat in the area of Jakarta. Data were collected from August to December 2017.

Findings

High customer knowledge is able to encourage customer intimacy, and high customer intimacy is also able to encourage repurchase intention. On the other hand, it was found that customer knowledge was not directly able to increase the intention of repeat purchase. However, from the mediation test (indirect effect) is seen with high customer knowledge, supported by the high customer intimacy, it can indirectly increase the high repurchasing intention.

Originality/value

Originality is seen from testing the mediation effect of customer intimacy on the influence of customer knowledge on purchase intentions. Furthermore, inconsistencies put the customer’s familiarity with familiarity, and familiarity with the intention of repeat purchase, are re-examined in the context of sharia banks. It is assumed the test results will be different if done in different countries and institutions.

Details

VINE Journal of Information and Knowledge Management Systems, vol. 49 no. 4
Type: Research Article
ISSN: 2059-5891

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Article
Publication date: 11 May 2020

Setiawan Budi Utomo, Ratih Sekaryuni, Agus Widarjono, Achmad Tohirin and Heri Sudarsono

The purpose of this study is to identify and explore the role of Islamic financing in supporting development of halal industry in Indonesia.

Abstract

Purpose

The purpose of this study is to identify and explore the role of Islamic financing in supporting development of halal industry in Indonesia.

Design/methodology/approach

This research is divided into two studies. The first study uses survey-based quantitative method and the second study uses focus group discussion (FGD) method. Using a purposive and proportional sampling technique in the first study, this research collected 1,985 samples of Islamic financial products of business owners (demand-side) from all parts of Indonesia. The data were analyzed using the partial least square structural equation modeling approach. The authors also conducted FGDs, involving 35 participants from government, financial, social and education institutions (supply-side) as well as business owners (demand-side) in three separated times.

Findings

In the first study, it can be identified that literacy on Islamic finance, attitude and awareness strongly affect business owners’ intention to use Islamic financial products. It is also found that subjective norm significantly influences literacy, attitude and awareness. Interestingly, religiosity does not significantly affect attitude toward Islamic financial products. According to the FGD in the second study, this research generates several factors motivating business owners’ preference to choose conventional rather than Islamic financial products, including expensive pricing, less developed technology, bad service quality and the halal status of the products. The reason for insignificant results of religiosity on attitude in the first study is explained in the second study. Most users are utilitarians who mainly perceived the products based on the sought benefits provided by the products.

Practical implications

This research offers the government a road map showing the strategy to build Islamic financial ecosystem in Indonesia. The road map integrates supply-side, which includes government, financial industries, social and education institutions and scientific organizations, and demand-side, which includes business owners or entrepreneur associations.

Originality/value

This research provides a wide range of samples derived from business owners’ respondents of halal industry in all representative islands in Indonesia. Therefore, it gives more holistic and representative findings. In addition, the analysis in this research covers not only the demand-side but also the supply-side perspective. Lastly, this research provides an Islamic financial ecosystem model that integrates all stakeholders to improve halal industry performance as a whole.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

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Book part
Publication date: 19 November 2018

Mohd Izuwan Mahyudin and Azizi Che Seman

Purpose – A study of Islamic banking products, especially bay’ al-tawarruq transactions, demonstrates that the purpose of these transactions is to provide liquidity to the…

Abstract

Purpose – A study of Islamic banking products, especially bay’ al-tawarruq transactions, demonstrates that the purpose of these transactions is to provide liquidity to the customer, such as personal financing, working capital expenditure, cash lines and credit cards. However, as the industry expands, the industry is innovating to extend products to include an investment and deposit instrument that provides a fixed return to the customer. As the second fully-fledged Islamic bank in Malaysia, Bank Muamalat Malaysia Berhad (BMMB) offers products based on the bay’ al-tawarruq concept.

Methodology/approach – This study investigates the original principles of the bay’ al-tawarruq contract and its current applications in BMMB.

Findings – The study found that the bay’ al-tawarruq contract is being adopted as an alternative to the bay’ al-‘inah contract, especially for financing-based products offered by BMMB.

Originality/value – This is an attempt to study the application of Tawarruq contract in Bank Muamalat’s product offerings based on the process and mechanism of Bursa Suq al-Sila’ (BSAS).

Details

New Developments in Islamic Economics
Type: Book
ISBN: 978-1-78756-283-7

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