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1 – 10 of over 1000M. Kabir Hassan and Mustafa Raza Rabbani
The purpose of this study is to investigate the role of Auditing and Accounting Organization for Islamic Financial Institution (AOIFI) governance disclosure on the performance of…
Abstract
Purpose
The purpose of this study is to investigate the role of Auditing and Accounting Organization for Islamic Financial Institution (AOIFI) governance disclosure on the performance of Islamic financial institutions (IFIs) through systematic literature review approach.
Design/methodology/approach
This study is based on the review of literature related to the AAOIFI accounting standards downloaded from Scopus database. This study includes review of 126 research articles, 10 review papers, 9 book chapters and 5 conference papers related to different roles played by AAOIFI in providing standards for accounting, auditing, governance and ethics for global IFIs.
Findings
The findings of this study suggest that AAOIFI has played a critical role in developing the accounting standards for the IFIs and contributed positively to the overall growth of the Islamic finance industry.
Practical implications
AAOIFI has played a critical role in issuing and development of accounting and auditing standards and has contributed positively to the financial performance of IFIs. Research gaps are identified, and there is a need to work on these gaps.
Originality/value
This study will contribute to the understanding the role of AAOIFI in issuing and development of accounting and governance standards and future research agenda based on a thorough review of literature.
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Siti Khomsatun, Hilda Rossieta, Fitriany Fitriany and Mustafa Edwin Nasution
The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may…
Abstract
The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may increase bank soundness. This study aims to investigate the relationship of sharia disclosure and Sharia Supervisory Board in influencing Islamic bank soundness in the different regulatory framework of the country. Using purposive sampling, the research covered 84 Islamic banks in 16 countries during the period 2013–2015 with lag data of Islamic bank soundness. The result shows sharia disclosure influences on Islamic bank soundness for management efficiency, capital adequacy ratio, asset quality, and liquidity. The results also show that sharia disclosure mediates the indirect effect of SSB on Islamic bank soundness. The regulatory framework (sharia accounting standard and SSB regulation) shows moderating effect of regulation framework proved on the association of sharia disclosure with management efficiency, capital, and liquidity. The effect is indirectly depending on the regulatory framework for proxy management efficiency, capital, and liquidity. The implication of the research suggests that sharia disclosure could increase the market discipline mechanism of Islamic bank stream. The Islamic bank can increase the transparency using sharia disclosure as a branding for increasing public trust, even though in the deficient Islamic bank regulation countries.
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Sherif El-Halaby, Sameh Aboul-Dahab and Nuha Bin Qoud
This paper aims to systematically review the existing studies for Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards which include…
Abstract
Purpose
This paper aims to systematically review the existing studies for Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards which include different tracks of researches and then identify the gaps to propose opportunities for future research.
Design/methodology/approach
By adopting a systematic literature review approach, 46 papers that were published between 2000 and 2020 from 23 journals concerned with AAOIFI were selected for review and analysis.
Findings
The authors combine electronic searches to identify relevant studies using keywords such as “AAOIFI” or and “Islamic standards.” In light of the existing studies’ limitations, this paper derives and summarizes five leading future research tracks: identifies the research gaps in AAOIFI and then suggests that AAOIFI still requires more empirical analyses; identifies the alternative analytical methods as meta-analysis; identifies additional measurements for macro and microeconomics factors; identifies recent tracks as corresponding to Covid-19 pandemic; and future studies should consider the role of central banks and positive criticism for AAOIFI.
Practical implications
This analysis address the literature gaps on measuring compliance, determinants and consequences of AAOIFI adoption as this study serves as a guide for the researchers, regulators and Islamic financial institutions in research associated with this area. The findings would support AAOIFI, regulators and related authorities across jurisdictions with suggestions on improving the current AAOIFI practices.
Originality/value
This literature review is a historical record and guidance for researchers who seek to examine and explore several questions about AAOIFI. To the best of the authors’ knowledge, this is the first paper that applies systematic literature review over AAOIFI research field.
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Bassam Mohammad Maali, Usama Adnan Fendi and Muhannad Ahmad Atmeh
This paper aims to investigate the economic substance of Islamic banks’ transaction as perceived by the employees and regulators of banks and the effect of such substance on the…
Abstract
Purpose
This paper aims to investigate the economic substance of Islamic banks’ transaction as perceived by the employees and regulators of banks and the effect of such substance on the need for special accounting standards for Islamic banks. If there is a distinctive “Islamic economic substance”, then special accounting practices may be necessary such as the standards of the Accounting and Auditing Organization for Islamic Financial Institutions.
Design/methodology/approach
A qualitative inquiry on one of the leading Islamic banks in the Middle East was conducted to investigate the economic substance of the bank’s main two transactions; the deposit system and Murabaha financing, as perceived by informants within one of the earliest Islamic banks and its regulators.
Findings
It is found that despite the belief that the transactions under examination were different from equivalents within conventional banking, practice within the bank was not consistent with such a belief. Informants largely perceived the economic reality of the investigated transaction as being not different from conventional banks’ transactions, and this would affect the need for special accounting and regulatory frameworks.
Research limitations/implications
This investigation is confined to informants working within one Islamic bank; their views and perceptions may not coincide with those working in other Islamic banks in the world.
Practical implications
The results of this investigation provide policy implications for Islamic banks, regulators and standards setters in regard to the need for special accounting standards for Islamic banks.
Originality/value
The paper is one of the first papers that uses a qualitative inquiry on the main transactions of Islamic banks and the related need for special accounting practices. The paper provides a new perspective on the debate over whether Islamic banking is genuinely innovative or is merely a replicate for conventional banking.
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Christos Alexakis and Alexandros Tsikouras
The purpose of this paper is to provide an overview of the regulatory framework and key regulatory institutions and industry associations in Islamic finance today and highlight…
Abstract
Purpose
The purpose of this paper is to provide an overview of the regulatory framework and key regulatory institutions and industry associations in Islamic finance today and highlight areas that merit increased attention.
Design/methodology/approach
A wide range of bibliography was reviewed, with particular focus on the standards published by the Islamic Financial Services Board and the Accounting and Auditing Organization for Islamic Financial Institutions. Regulatory topics of particular interest in the Islamic financial world are reviewed. An overview of the main Islamic regulatory institutions is provided. The paper ends with a set of hypotheses requiring further research.
Findings
The paper finds that the growth of the Islamic finance sector may be impacted by the: increased involvement in Islamic finance by Western regulators, as well as credit rating agencies; existence of sound accounting procedures; increased protection of stakeholders of Islamic Financial Institutions.
Originality/value
This paper provides useful information on the current status of the regulatory framework in Islamic finance and highlights areas for further research for academics and professionals alike.
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This paper aims to analyze the need of Islamic banks for specific Statement of Financial Accounting Standards (SFAS) No. 110 for sukuk accounting in Indonesia. In fact, some…
Abstract
Purpose
This paper aims to analyze the need of Islamic banks for specific Statement of Financial Accounting Standards (SFAS) No. 110 for sukuk accounting in Indonesia. In fact, some Islamic banks have already prepared International Financial Reporting Standards (IFRS), and accordingly, a suitable standard is needed for this case.
Design/methodology/approach
The research methodology involved interview with a senior accounting manager of an Islamic bank focusing on relevant topics in sukuk to sharpen the analysis. Equally important, research reviewed and compared financial statements on sukuk accounting among Islamic banks, before and after adoption of sukuk accounting standard.
Findings
IFRS require market valuation based on interest rate. As interest rate is unlawful in Islamic teaching, IFRS may not accordingly be suitable. Therefore, SFAS No. 110 was issued by the Indonesian Institute of Accountants (Ikatan Akuntan Indonesia). Considering the fact that this standard did not explicitly adopt the IFRS paradigm, there have been consequent conflicts in Islamic bank management because of preference of global recognition to IFRS. Adopting IFRS would be more compatible with other countries’ general accounting standards. In addition, significant differences are found in sukuk accounting treatments by Islamic banks before and after the standard adoption.
Research limitations/implications
This research only focuses on such question of why specific accounting standard for sukuk accounting is needed by Islamic banks in Indonesia, while only few Indonesian Islamic banks were initially aware of the issue.
Originality/value
This paper may be the first paper discussing the response to and need for sukuk accounting in Indonesian Islamic banks.
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Roni Andespa, Yulia Hendri Yeni, Yudi Fernando and Dessy Kurnia Sari
This study aims to investigate what past scholars have learned about Muslim consumer compliance behaviour in Islamic banks and identify what future research is needed. In…
Abstract
Purpose
This study aims to investigate what past scholars have learned about Muslim consumer compliance behaviour in Islamic banks and identify what future research is needed. In addition, it also explores the relationship model between the previously studied determining factors and the customer’s Sharia compliance behaviour.
Design/methodology/approach
This study used a bibliometric–systematic literature review analysis using the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) technique by reviewing the articles published from 2013 to 2023. The PRISMA procedures involved several stages, including identification, screening, eligibility, analysis and conclusion based on the findings.
Findings
The results found that customer Sharia compliance behaviour determinants in Islamic banks are attitude, subjective norms, perceived behavioural control, Islamic financial literacy, religiosity, consumer conformity, Islamic branding and behavioural intention. Interestingly, the results indicated that such factors as consumer conformity, Islamic branding and sustainable intentions are less discussed.
Practical implications
Decision-makers in Islamic banks must use digital technology to offer better service and make operations more reachable for customers to access information, complete transactions and manage their accounts by Sharia principles. Therefore, the bank needs to continually produce innovative products and services so that customers have a greater variety of options to suit their Sharia-compliant financial needs. Theoretically, this study has contributed by finding the main critical domains influencing customers’ Sharia compliance behaviour, such as attitudes, subjective norms, perceptions of behavioural control, knowledge of Islamic finance, religiosity, consumer conformity, Islamic branding and behavioural intentions. Then, it makes a theoretical contribution by establishing a model that explains how customers make decisions based on Sharia-related factors in the context of their purchases.
Originality/value
Past studies focused on the Sharia compliance behaviour in paying Zakat for takaful customers. Therefore, this study provides critical factors of Sharia compliance behaviour on conformity, Islamic branding and sustainable intention regarding unexplored consensus on the determinants and outcomes of customer Sharia compliance behaviour of Islamic banking.
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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 incorporating the…
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.
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Ahmad Baehaqi, M. Nur A. Birton and Fahmi Ali Hudaefi
This paper aims to critically analyse the application of present value (PV) practised in the concept of time value of money (TVM) from the perspective of maqāṣid al-Sharī‘ah…
Abstract
Purpose
This paper aims to critically analyse the application of present value (PV) practised in the concept of time value of money (TVM) from the perspective of maqāṣid al-Sharī‘ah (objective of Islamic law) explained by Ibn ‘Ashur. The analysis is important as this concept has been adopted in the practice of Islamic accounting measurement.
Design/methodology/approach
This paper uses qualitative research approach. The authors first review literature related to TVM in Islamic perspective to understand the extent to which the scholarly articles have been discussing this topic. Furthermore, the authors conduct face-to-face interviews with the experts to comprehend the means of TVM application in the recent Islamic accounting practices. The tawhid (monotheistic) paradigm is further used with special reference to the concept of maqāṣid al-Sharī‘ah of Ibn ‘Ashur to critically analyse the practice of TVM in Islamic accounting measurement.
Findings
This study identifies the opposing views among the experts on the topic of TVM from the Islamic perspective. That is, the experts’ opinion on this issue can be classified into two. Firstly, a view that rejects TVM and proposes the concept of economic value of time. Secondly, an opinion that recognises TVM with the basis of bay’ al-mu’ajjal (deferred sale). This paper further critically analyses these two opposing opinions. The discussion is established based on the theory of maqāṣid al-Sharī‘ah as explained by Ibn ‘Ashur and the excerpts from interviewing the experts. This work draws a conclusion that such PV-based measurement of TVM does not meet the Islamic principles explained in the theory of Ibn ‘Ashur’s maqāṣid al-Sharī‘ah. Thus, the practice of PV measurement in Islamic accounting is debatable.
Research limitations/implications
This study does not establish a positivism discussion. It is thus the generalisation of this work is not applicable to the Islamic perspective in general. Rather, it is limited to Ibn ‘Ashur’s maqāṣid al-Sharī‘ah.
Practical implications
An analysis of PV measurement adoption in Islamic accounting from maqāṣid al-Sharī‘ah perspective is practically important to raise the awareness that such practice is debatable in Islamic principles. That is, such debate opens new arena for academics, industry professionals and other related stakeholders to further discuss an ideal practice of Islamic accounting.
Originality/value
This paper is among the pioneers that analyses the concept of TVM, in particular relation to PV measurement in Islamic accounting practice from the perspective of Ibn ‘Ashur’s maqāṣid al-Sharī‘ah.
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