Search results
21 – 30 of 315The purpose of this paper is to provide an extension of a previous study by the author into compliance by Islamic banks in Bahrain with accounting standards issued by the…
Abstract
Purpose
The purpose of this paper is to provide an extension of a previous study by the author into compliance by Islamic banks in Bahrain with accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
Design/methodology/approach
A number of compliance indexes are constructed to better understand compliance by the sample banks. The use of multiple indexes addresses methodological shortcomings identified in the previous study.
Findings
Compliance is found to be higher for some Islamic issues than for others. In a relative sense, compliance is found to be similar to that for the region with standards issued by the International Accounting Standards Board.
Research limitations/implications
The sample is limited to Islamic financial institutions in Bahrain. This is necessitated by the lack of adaptation elsewhere. The relatively high compliance found in Bahrain suggests broader adoption would be successful and would contribute to the overall regulation of the Islamic financial sector.
Originality/value
The AAOIFI has existed for over 20 years, but little empirical research had been conducted into compliance with the standards developed by this body. This paper, along with the previous study by the author, helps address this gap.
Details
Keywords
The purpose of this paper is to investigate the role of standard‐setting bodies and rating agencies which compete for authority in Islamic finance. It does so through a…
Abstract
Purpose
The purpose of this paper is to investigate the role of standard‐setting bodies and rating agencies which compete for authority in Islamic finance. It does so through a consideration of a recent debate over the permissibility of sukuk financing.
Design/methodology/approach
The methods used are a combination of archival and bibliographic research, coupled with the author's previous research on Islamic banking and finance.
Findings
While the debate over sukuk hinged on whether the structures are shari'a compliant in form only, not in substance, the role of sukuk in neoliberal reform and the privatization of state resources reveal a deeper potential conflict between Islamic standard‐setting bodies and global neoliberal projects more broadly.
Research limitations/implications
The implications are significant for other Islamic finance contractual forms and modes of finance. They are also significant in light of the global financial crisis, and the recent debt crisis in Dubai. The research limitations have to do with the fact that this is a fast‐moving field and the global financial crisis has destabilized many institutions – both conventional and Islamic – in structured finance.
Originality/value
Few scholars have considered sukuk's legitimacy, or the competition between Islamic standard‐setting bodies and non‐Islamic global rating agencies.
The purpose of this study is to identify the relation between the conflicts of interest in the Shari'a Supervisory Board (SSB) in the Islamic financial institutions (IFIs) and six…
Abstract
Purpose
The purpose of this study is to identify the relation between the conflicts of interest in the Shari'a Supervisory Board (SSB) in the Islamic financial institutions (IFIs) and six independent variables: the SSB executive position, the SSB remuneration, the relation between the SSB members and the Board of Directors (BoD), and the multiple memberships in Islamic funds, issuers of Islamic bonds (Sukuk), and companies trading in capital markets.
Design/methodology/approach
The variables are articulated in six hypotheses and tested by ordinary least square regression. The data were collected via a questionnaire which was sent to the shareholders, the BoD, and the SSB members of all of the IFIs in the Gulf Cooperation Council (GCC) countries.
Findings
The results indicate that the SSB executive position, the relation between the SSB members and the BoDs, and the membership in Islamic funds and issuers of Islamic bonds are significantly related to the conflicts of interest, whereas remuneration and membership in companies trading in capital markets have insignificant relation.
Research limitations/implications
The paper does not address the impact of SSB ownership in the IFIs, or the relation between the SSB and the shareholders, or the impact of the corporate governance codes on the relationship between the IFI and the SSB.
Practical implications
The study recommends testing the hypotheses in other geographies to generalize the results, and measuring the impact of the SSB ownership on the conflicts of interest as well as its relation with shareholders, regulators, and clients.
Social implications
The paper provides practical implications to the SSB members and the BoD in the IFIs and calls for setting a maximum number of SSBs for each SSB member.
Originality/value
This study contributes to the literature gap of the SSB role in the governance of IFIs. It is believed to be one of first studies that provide empirical evidence about the SSB conflicts of interest in the IFIs of the GCC region.
Details
Keywords
Umar Habibu Umar, Muhammad Bilyaminu Ado and Habibu Ayuba
The purpose of this study is to establish whether religion (interest) is an impediment to Nigeria’s financial inclusion targets to be achieved by the year 2020.
Abstract
Purpose
The purpose of this study is to establish whether religion (interest) is an impediment to Nigeria’s financial inclusion targets to be achieved by the year 2020.
Design/methodology/approach
The data were collected through semi-structured interviews and documentary evidence. Thematic analysis was used to analyze the interview responses.
Findings
It was found that all the Central Bank of Nigeria (CBN) programs that contribute toward achieving financial inclusion are interest-based ones. Further, none of them provides a non-interest window except Commercial Agricultural Credit Schemes (CACS). Even the CACS is not fully Shari’a-compliant, as it requires further modification. Despite the fact that interest is condemned in Islam, a majority of Muslims have been found to be accessing interest-based funds. Hence, interest is not a factor that hinders the achievement of reducing Nigeria’s financial exclusion rate to 20 per cent by the year 2020.
Research limitations/implications
This study inquired into the programs under the Development Finance Department of the CBN by using semi-structured interviews and documentary evidence. Other programs of the federal government, state governments, NGOs and other private organizations and individuals are not considered. The findings have pointed out the areas to conduct future studies on religion and financial inclusion.
Practical implications
Although Muslims who complained about interest are a minority, there is the need to provide non-interest windows in the programs before they start shunning these programs, as a lot influential Muslim scholars are currently preaching against the interest.
Originality/value
The paper is one of the few studies that support the view that interest does not hinder the achievement of financial inclusion in a Muslim majority country.
Details
Keywords
Sayd Farook, M. Kabir Hassan and Roman Lanis
The purpose of this paper is to develop and test a theoretical model of the determinants of Islamic banks' social disclosures. In testing the hypotheses, the level of social…
Abstract
Purpose
The purpose of this paper is to develop and test a theoretical model of the determinants of Islamic banks' social disclosures. In testing the hypotheses, the level of social disclosure in Islamic banks' annual reports is gauged based on a benchmark derived from Islamic principles.
Design/methodology/approach
Applying the principles of systems‐oriented theories such as political economy, legitimacy and stakeholder theories, as well as agency theory, hypotheses linking Islamic social disclosure and its determinants are developed. The sample comprised 47 Islamic banks in 14 countries and the data related to the dependent (Islamic banks social disclosures) variable are collected mainly from the annual reports, while data for the independent variables (determinants) are collected from various sources. Regression analysis was conducted to test the hypotheses.
Findings
Corporate social responsibility (CSR) disclosure by Islamic banks varies significantly across the sample. According to the regression results, variation is best explained by the “influence of the relevant publics” and the “Shari'ah (SSB supervisory boards) corporate governance mechanism” variables. Using alternative variable measures, the regression results suggest that “level of social and political freedom” and “the proportion of investment account deposits to total assets” are also significant determinants of Islamic banks' CSR disclosure.
Research limitations/implications
The major limitation of this paper is the small sample size of only 47 Islamic banking institutions. Future studies may expand the sample size used here.
Practical implications
The results indicate the significance of the SSB as a governance mechanism that may increase the CSR disclosure of Islamic banks. Thus, from a policy perspective, bodies that regulate Islamic banking should consider mandating the SSB for all “Islamic banks”.
Originality/value
This research is the first to provide an a priori basis for CSR disclosure of Islamic banks and to test using empirical data. The findings of this research should be of significant value to regulators, shareholders and deposit holders of Islamic banks. In a more general context, this paper is one of a few that has operationalised Gray et al.'s conception of “levels of resolution of perception” and empirically tested the concept using non‐traditional organisations (Islamic banks) in a non‐Western context. This adds further credibility to systems‐oriented theories in explaining CSR disclosures of non‐Western organisations operating in non‐Western cultures.
Details
Keywords
Golam Mostafa Khan and Syed Jamal Uddin
The purpose of this paper is to examine and illustrate how a relatively young Islamic financial institution has successfully gone international. Despite the fact there are many…
Abstract
Purpose
The purpose of this paper is to examine and illustrate how a relatively young Islamic financial institution has successfully gone international. Despite the fact there are many larger financial institutions in the Arabian Gulf, they either failed to identify the opportunity or were reluctant to go international. But Arcapita seem to have capitalized on this apparently untapped niche market in the international arena through its unique policies and strategies.
Design/methodology/approach
Relevant data and literature have been collected from publicly available sources. Basic company information was collected from company annual reports, press releases, and web sites. The Bankscope database has been used to generate the bank's comparative financial performance.
Findings
Islamic Investment banking is a relatively new development. This is essentially a niche market and Arcapita has not only identified this opportunity but also has become internationally successful within a short period of time. The case illustrates how the company raises funds from the Middle East region and then invests in the USA, Europe, the Middle East and Asia.
Originality/value
Being the first of its kind in conforming to the Shari’a Principles (Islamic Law) fully in its business, Arcapita's progress to date is quite spectacular. This comprehensive teaching case study provides the company history and background, as well as insights into its operational and organizational realities, strategies and management practices. Academics, students and practitioners from the region and beyond will find this case study interesting and useful.
Details
Keywords
The most crucial challenge facing Islamic Financial Institutions (IFIs) is the full compliance of their activities with shari'ah principles. The complexity of IFIs requires…
Abstract
The most crucial challenge facing Islamic Financial Institutions (IFIs) is the full compliance of their activities with shari'ah principles. The complexity of IFIs requires Otoritas Jasa Keuangan (OJK, Indonesian Financial Services Authority) to adopt a good shari'ah governance framework to address shari'ah risks of Islamic banking and financial institutions (IBFIs). However, the current shari'ah governance structure in Indonesia is far from ideal compared to the international best practice. This chapter proposes a new shari'ah governance framework by involving shari'ah supervisory board authority (Otoritas Dewan Pengawas Syariah) under the commissioners of OJK to oversight, regulate, and supervise the shari'ah matters for IBFIs in Indonesia. The chapter discusses the challenges in adopting this new framework. The chapter concludes that the current shortcomings of the proper shari'ah governance framework for shari'ah supervision and regulation requires a new shari'ah board authority under the commissioners of OJK who has full authority over shari'ah matters.
Details
Keywords
I study the determinants of conventional leverage in a sample of publicly listed corporations based in Saudi Arabia, United Arab Emirates, and Qatar, for a period spanning from…
Abstract
I study the determinants of conventional leverage in a sample of publicly listed corporations based in Saudi Arabia, United Arab Emirates, and Qatar, for a period spanning from 2005 up to end of 2014, and investigate whether those determinants can also explain the utilization of Sukuk by the same corporations in their capital structures. Evidence related to the determinants of conventional leverage is consistent with results from prior studies conducted on corporations based in developed and developing countries. Firm’s size, profitability, tangibility, age, and tendency to pay dividends are significant determinants of conventional leverage. However, not all those factors significantly explain the utilization of Sukuk as a financing vehicle. The size of the firm remains to be the most significant factor, in addition to the conformance of those corporations with respect to Shari’a principles measured by their utilization of other Islamic investments and financing instruments. Overall, I conclude that models used to predict conventional leverage are not capable of fully explaining the determinants of Sukuk issuances.
Details