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Despite the growing prevalence of Sukuk issuances, there remains a significant knowledge gap concerning their specific risk exposures to originators of issuances rather than to investors, particularly compared to conventional bonds, and the implications of this for the corporate governance (CG) of originators. This study aims to examine the risks faced by originators and sponsors of Sukuk issuances, drawing insights from unique Sukuk case studies. The distinct characteristics of Sukuk include legal intricacies and Shari’ah compliance, which pose particular challenges to originators. Effective risk management is a key issue for CG in these areas.

A sequential explanatory case study method is employed, utilising the content analysis approach to extract information from various articles, reports and Sukuk case studies, including Tamweel Residential Mortgage Backed Sukuk and Tamweel Sukuk Limited.

The findings underscore the critical issues for originators in navigating risks within Sukuk structures, particularly concerning Shari’ah non-compliance and default risk. This highlights the importance of managing risks inherent in Sukuk structures, considering both Shari’ah compliance obligations and the sustainability of Sukuk in terms of default risk. Default scenarios raise unique questions regarding stakeholders' interests, specifically those of shareholders, investors and creditors, contingent on the Sukuk issuance's structure and contractual basis of the Sukuk issuance.

The need for a CG framework conducive to the effective management of these risks, thereby ensuring both Shari’ah compliance and long-term viability, which is crucial for the sustainable growth of Sukuk in the financial landscape.

This study offers a unique perspective by focusing on the risks faced by originators of Sukuk issuances, a largely unexplored area, and underscores the importance of effective risk management for CG and sustainability of Sukuk issuances.

The paper aims to examine the impact of Shari'ah governance quality on environmental, social and governance (ESG) performance in Islamic banks.

The study's sample consists of 66 Islamic banks from 14 countries over 2015–2019. The research uses the Heckman model, which is a two-stage estimation method to obtain unbiased estimates, as ESG scores are only observable for 17 Islamic banks in Eikon Refinitiv database at the time of the analysis.

The analysis shows that Shari'ah governance has a beneficial role to achieve ESG performance. The analysis also shows that enhanced profiles of Shari'ah supervisory boards' (SSB) attributes are more efficient than the operational procedures to promote ESG performance. In addition, the analysis shows that enhanced SSBs' attributes strengthen the bank's corporate governance framework, while sound-designed procedures increase the bank's social activities by emphasizing their roles to ensure Shari'ah compliance. Finally, the analysis sheds light on the failure of Shari'ah governance to promote environmental performance.

The existing databases providing companies' ESG-related information still do not offer sufficient data to conduct an international study with a larger sample of Islamic banks (IBs) having ESG scores for a more extended period.

The research provides policy insights to Islamic banks' stakeholders to promote social and governance performance in the Islamic finance industry through improving Shari'ah governance practices. However, raising environmental awareness is imminent among all actors implicated in the Shari'ah governance processes to help overcome the anthropogenic risks.

The research complements the governance-banks' ESG performance literature by examining the role of Shari'ah governance. The research also extends the literature on Islamic banks' sustainability by pointing to the Shari'ah governance failure to enhance environmental performance and thus achieve Maqasid al-Shariah regarding the environment.

Islamic financial institutions (IFIs) in Malaysia continue to promote Shari‘ah-compliant business and transactions. As a result, the governors have a lot to think about before issuing any fatwa or ordinance, which impacts the majority of Malaysians. Nevertheless, the point of views from the governors have not been highlighted much. This research seeks to investigate the extent to which the conception of al-Siyasah al-Shar‘iyyah is embraced by Shari‘ah committees’ leadership roles within IFIs. The importance of al-Siyasah al-Shar‘iyyah in decision-making makes abandoning the Shari‘ah principle untenable and its significant role for IFIs in Malaysia cannot be overstated. It serves as a crucial tool for decision-making by authorities and governors.

The objectives of this research are attained by examining diverse sources obtained through library research, encompassing books, journals, newspapers, websites and reports. In addition, to use an analytical method to assess the role of al-Siyasah al-Shar‘iyyah in IFIs pratical, the authors collect information through interviews with five participants actively engaged in Shari‘ah committees within financial institutions, both directly and indirectly.

The research paper concludes that al-Siyasah al-Shar‘iyyah holds significance for Shari‘ah committees in IFIs when providing legal opinions. In situations where existing madhhab-based laws prove insufficient for addressing a particular issue, the Shari‘ah committees will autonomously engage in new ijtihad to ensure effective resolution of the matter.

The implication that could have been resulted from this study is to indicate how Shari‘ah committees in IFIs structuring a set of rules and regulations embedded by al-Siyasah al-Shar‘iyyah elements to produce maṣlaḥaḥ for the ummah. This perspective is barely discussed in depth as Malaysia has unanimous scholars who work in this area. Thus, the authors attempt to bring the discussion academically and express the point of view from governors’ perspective.

In the Malaysian context, where Islamic banks and financial institutions are overseen by Shari‘ah committee members and the Central Bank of Malaysia, this study delves into the practical experiences of governors in carrying out the responsibilities of al-Siyasah al-Shar‘iyyah within the decision-making process. The objective is to investigate the perspectives of Shari‘ah committees when they encounter scenarios where prevailing madhhab opinions prove inadequate in addressing contemporary issues within the country.

The purpose of this paper is to examine how the board of directors effectiveness (BODE), financial determinants, Takaful-specific determinants and the Takaful firms’ financial stability are related to the Shari’ah Supervisory Board’s quality (SCQ).

Using hierarchical regression analysis, the authors examine the determinants of financial stability of Takaful insurance and the authors test the moderator role of SCQ over 2016–2022 on a sample of 19 listed Takaful firms in 10 countries in the Middle East and South Asia region.

The findings reveal that SCQ negatively moderates the positive relationship between BODE, the Takaful model, diversification strategy, solvency, liquidity and Takaful financial stability. Shari’ah governance plays a crucial role in improving the financial soundness and the Shari’ah compliance of Takaful insurance.

This paper includes two main limitations. The results are restricted to the Middle East region and South Asia and may not be generalized to other areas. The study presents data from only 19 Takaful firms.

This kind of investigation is of immense relevance to enhance the understanding of governance and soundness of Takaful companies. Furthermore, it serves as a guide to the recruitment of Shari’ah board members, the choice of Takaful model and appropriate strategy to increase its financial stability.

This research studies the financial stability of Takaful insurance and the moderating role of SCQ, unlike the majority of other works that focus on financial performance.

This study aimed at exploring the differential effects of different corporate governance (CG) indicators on risk management practices in Islamic financial institutions (IFIs) and conventional financial institutions (CFIs) of Pakistan. It also investigated the moderating role of institutional quality (IQ) in shaping the effects of CG practices on financial institutions of Pakistan.

A sample of 57 financial institutions including commercial banks, insurance companies and Modarba companies over the period 2006–2017 is used to carry out the empirical analysis. The authors applied the robust two-step system-generalized method of moments estimator, which is also called the dynamic panel data estimator. They also built the PCA-based composite index of CG and IQ by using different indicators to investigate the moderating role of IQ. They used three proxies for risk taking, five for CG and one for Shari’ah governance. To test the validity of the instruments, they applied the Arellano and Bond’s (1991) AR (1) and AR (2) tests and the J-statistic of Hansen (1982).

The results provided strong evidence that several individual characteristics of CG and the composite index are significantly related to the operational risk, the liquidity risk and the Z-score (a proxy for solvency risk). The results also revealed that IQ significantly and substantially contributes in reducing the level of risks. Finally, the estimation results indicated that the effects of CG on risk management are significantly different at IFIs and CFIs. This differential impact is mainly attributed to the fundamental differences in business models, operational strategies and contractual obligations of both types of institutions.

The findings of this study are important for enhancing our understanding of how CG relates to risk taking in Islamic and conventional financial services industries and how good quality institutions are important for formulating the governance effects on the risk-taking behavior of financial institutions. The findings suggest that a suitable size of board should be chosen to manage the risk effectively. As the findings show that the risk-taking behavior of IFIs differs from that of CFIs, the regulators and international standard setting bodies should tailor the regulatory frameworks accordingly.

This paper is different from the existing studies in four aspects. First, to the best of the authors’ knowledge, this is the first empirical investigation in Pakistan, which does the comparison of IFIs and CFIs while examining the impacts of CG on risk management. Second, the paper constructs the composite index of CG by considering several different indicators of governance and examines the combined effect of governance indicators on risk management process. Third, this paper adds to the growing literature on the role of IQ by investigating whether it acts as a moderator between CG structures and risk management and if yes, then whether this moderating role is different for IFIs and CFIs. Finally, the paper builds upon the existing research work on the CG effects for different types of financial institutions by proposing a single regression based analytical framework for comparing the effects across two different types of institutions, harvesting the benefits of higher degrees of freedom and avoiding/minimizing the measurement error.

This study aims to explore the prospects of istijrar financing in the Islamic banking of Bangladesh. Istijrar is a supply sale contract that facilitates recurrent transactions under a master agreement without needing a deal-to-deal agreement. Murabahah financing in Bangladesh is being criticized for Shari’ah violations, which can be minimized if istijrar financing is integrated and applied.

The study uses a qualitative approach, primarily using a semistructured interview method to collect the primary data. The study conducted 13 one-to-one interviews with leading Islamic banking experts in the country, including Shari’ah scholars, Islamic bankers and regulators. Besides, the study consults with classical and contemporary fiqhi sources to realize the status of istijrar sale in Islamic law. Thematic analysis is performed to explore the qualitative data.

The study finds that istijrar financing has great prospects in the Islamic banking of Bangladesh. Istijrar is applicable in consumer financing and can be offered as an alternative or supplement to murabahah. Also, postimport murabahah financing can be structured with istijrar, while it can also be used in export financing. Besides, a few challenges should be dealt with before offering istijrar, such as proper structure, lack of literacy, stakeholders’ awareness, Shari’ah and regulatory approval and alignment with the law of the land.

Murabahah financing is dominant on the asset side of Islamic banks’ balance sheets in Bangladesh. Murabahah practice in Bangladesh is frequently criticized for some possible Shari’ah violations. Also, more documents are needed for each murabahah operation, which eventually accelerates the costs. Applying istijrar would minimize these issues as it does not require a new contract for each deal. Multiple supplies can be done under a single agreement. Besides, istijrar reduces documentation hassle and transaction costs. Istijrar would be an easy practice and benefit the bank and its clients.

This study contributes to the body of knowledge and the Islamic banking industry. The existing studies have not adequately addressed the potential of istijrar in Islamic banking. In addition, this study will be an eye-opener for Islamic bankers to develop new products with istijrar.

Given the relative importance of the Shari’ah supervisory boards (SSBs) in Islamic banks’ (IBs’) performance, this study aims to examine the impact of SSB diversity on IBs’ performance from the stakeholders’ perspective in the context of Pakistan.

Random-effects model and generalized method of moment are used to investigate the impact of SSB diversity on IBs’ performance across a panel data of 22 Islamic banks in Pakistan from 2005 to 2020 inclusive.

The findings of this study show that SSB size, SSB relevant educational background diversity, bank’s size and bank’s stability have a positive impact on IBs’ performance. In contrast, SSB age, nationality and cross-membership diversities have a negative impact on IBs’ performance. Moreover, SSB gender, tenure and general educational diversities have no significant impact on IBs’ performance.

SSB diversity and IBs practices are different across different jurisdictions. This study is conducted on IBs in Pakistan because of data constraints; thus, the results of this study may not be generalizable to other countries' IBs.

In structuring the SSBs’ framework, the regulatory authorities and policymakers should consider mandating an ideal SSB size and hiring relevant qualified members with low cross-membership to improve IBs' performance. Thus, the structure potentially attracts Muslim stakeholders, enhances their satisfaction and improves IBs' performance.

Having diversified members in the SSB, IBs equally benefit both individual and group stakeholders in society. Diversity in SSB members enhances IBs' performance and the social welfare of various stakeholders in society.

To the best of the authors' knowledge, this is the first empirical research that examines comprehensively the impact of SSB structural and demographic diversities on IBs' performance in the context of Pakistan. This paper contributes to the unique Shari’ah governance structure in the context of Pakistan. Additionally, this study may serve to assist IBs’ stakeholders in better comprehending the SSB practices of IBs in Pakistan.

This study aims to investigate the implications for financial innovation and product development of differences between schools of jurisprudence (fiqh) pertaining across regional Muslim markets, and the consequences for global financial institutions.

The methodology is qualitative, drawing upon several sources. Firstly, differences in interpretation regarding the economic and moral responsibilities of financial institutions in Islamic and secular contexts. Secondly, contrasting tenets of schools of Islamic jurisprudence regarding the permissibility of products traded intra Muslim markets. Thirdly, characteristics of complex financial instruments traded in global secular markets prior to the credit crisis of 2007–2008.

Differences between Islamic and global secular interpretations regarding responsibilities of financial institutions militate against integrated markets across which products can be seamlessly traded. Global financial institutions should recognise that different Islamic schools of jurisprudence prioritise either legal form or substance of financial products, but not both simultaneously. This should be considered when designing new products for regional Muslim markets.

Global financial institutions which focus upon the legal (micro) form of new Islamic products should relate in investor prospectuses and marketing materials the extent to which these accommodate Islamic jurisprudence’s equal (macro) concern for public interest or maslahah. This may comprise the reallocation of risk from those unable to bear it to those willing to assume it for a price, reinforcing rather than compromising economic stability.

This study evaluates implications for product development and marketing for global financial institutions active in regional Muslim markets across which different Islamic schools of jurisprudence apply.

The purpose of this study is to examine the level of Shariah governance disclosure among Islamic banks in Malaysia and the Gulf Cooperation Council (GCC) countries (i.e. Kuwait, Bahrain, United Arab Emirates, Qatar, Oman and Saudi Arabia). On top of that, the effect of Shariah governance disclosure on Islamic banks financial performance is investigated.

Data underwent quantitative content analysis and a mean comparison of the Shariah governance disclosure mechanisms as well as multiple regression analysis. Shariah governance information is obtained from the Islamic banks' official websites and the Bursa Malaysia Exchange.

The results of the content analysis revealed that the level of Shariah governance disclosure among Malaysian Islamic banks has been more pronounced than in the GCC countries. Additionally, the multiple regression analysis results specified that of the five Shariah governance disclosure mechanisms, the Shariah committee emerged as the strongest determinant in the financial performance of the Islamic banks, followed by transparency and disclosure.

Islamic banks should emphasise publishing Shariah governance information in annual reports to reflect superior accounting practices as assessed by certified Shariah auditors with an effective monitoring system.

The empirical findings are vital for serving as a guideline for Islamic banks in Malaysia and the GCC countries to disclose their practice of Shariah governance and gain empirical insights into its effect on firms’ financial performance. Following that, Islamic banks would improve their accounting practices while adhering to Shariah principles, strengthen internal controls and boost their brand reputation.

The purpose of this paper is to provide a systematic literature review on Shariah governance and Islamic banks.

The literature was searched from Scopus and Web of Science using various queries related to Shariah governance and Islamic banks. Through a screening process, 93 articles were considered fit for the systematic literature review.

The paper provides a systematic review based on different themes, including measurement of Shariah governance in Islamic banks, disclosure of Shariah governance and its determinants, the impact of Shariah governance on performance, risk management and other outcomes of Islamic banks. Finally, issues and challenges of Shariah governance in Islamic banks are discussed, followed by conclusions and recommendations related to future research.

This study is the first of its kind, to the authors’ knowledge, to provide a comprehensive systematic literature on Shariah governance and Islamic banks by exploring different themes and highlighting multiple future avenues of research.