Search results

This study aims to analyze IFIs’ stakeholders’ perception on Shariah harmonization for financial reporting standards inIndonesia as a part of the development effort of linking the emerging global Islamic banking to Indonesian financial and industrial markets.

A sample of 160 respondents, who were stakeholders of Islamic banks, was taken from Jakarta, the capital city of Indonesia and its surrounding major districts to examine the stakeholders’ perception on Shariah harmonization effort toward the implementation of a uniformed financial reporting standard for Islamic financial institutions. Data for this study were collected using a structured questionnaire.

Through this study, the authors found several measures to be taken to ensure Shariah harmonization efforts in Indonesia such as deep understanding on the fatawā brought into practices and strict monitoring on the Islamic banks in applying the financial reporting standards that imply practicing the fatawā, both de jure and de facto. However, the respondents differ in their opinion on the possibility of Shariah harmonization, both de jure and de facto. The role of various actors involved in the financial reporting standardization may impede Shariah harmonization to take place.

The study is only looking at one case study, which is Indonesia. Therefore, future studies should consider more countries and significant number of respondents. Different research instruments to measure the perception can also be an interesting research exploration. In addition, adopting deep Islamic political economy of accounting theory may support better analysis on the issue of financial reporting standardization for Islamic financial institutions.

This paper has practical significance for financial reporting standard setters for Islamic banks and policy-makers to understand the key behavioral and demographical dimensions of their stakeholders and using these dimensions to effectively position important aspects in financial reporting standards setting.

This study aims to investigate the practice of bay’ ‘inah contract in personal and home financing products by some Islamic Finance Institutions (IFIs) and examine the differences in the selection of contracts in banking products amongst IFIs mainly involving personal financing. The study will also propose a solution to the problem of differences and simultaneously standardise personal financing contracts in Malaysia.

The methodology of this study is qualitative, in which the data are collected through library research and field studies. The library research is done by examining books of usul al-fiqh (principles of Islamic jurisprudence), mura’aht al-khilaf, maqasid shariah (objectives of Islamic law) articles, statutes and related circulars, while field studies are conducted in an unstructured interview method with some members of Shariah Advisory Council (SAC) and academicians from Bank Negara Malaysia (BNM), IFIs and public university.

The findings show that there is a difference in views amongst SAC members in IFIs on bay’ ‘inah contract that effects the differences in the execution of such contract in banking applications. The study found that the bay’ ‘inah contract was non Shariah (Islamic law) compliant based on Shariah’s arguments and the opinion of the majority of past and present Islamic scholars. The study found that the BNM’s SAC did not allow the bay’ ‘inah contract to be practiced in personal and home financing products. Hence, this study proposes standardisation steps based on differences in the problems studied. The study also suggested that the SAC of BNM make improvements and updates on its solution regarding the bay’ ‘inah contract so that it is not misunderstood especially amongst IFIs.

The study is only looking at one case study, which is the bay’ ‘inah contract practiced by the IFIs in Malaysia.

This study proposes the standardisation of personal financing products practiced by the IFIs. The results of this study can reduce Sharīʿah non-compliance products in the market. The results of this study have gained a deep understanding of the solution of bay’ ‘inah contract made by the SAC of BNM. The findings also reduce the conflict between Shariah scholars locally and internationally and can restore the image of Islamic banking in Malaysia from engaging with controversy products or contracts.

The confidence of the public in Islamic banking is increasing as there is no contractual engagement with serious controversial issues and contracts similar to the concept of riba and hilah (trick) that is prohibited by Islamic law in IFIs.

This study analyses the differences of fatwa (a ruling on the point of Islamic law) about bay’ ‘inah contract decided by some SACs of IFI based on the discipline of usul al-fiqh. The study found that the bay’ ‘inah contract is not allowed by Islamic law. The study has proposed the standardisation of the fatwa differences based on the concept of mura’aht al-khilaf and the concept of standardisation in Islamic finance and to standardise personal financing products amongst IFIs in Malaysia.

This study aims to explore the underlying issues related to the development of socially responsible investment (SRI) sukuk in Malaysia. It identifies factors attracting investors and issuers, as well as challenges for the development of SRI sukuk (Islamic bond) in Malaysia.

This study conducted semi-structured interviews to collect data from the institutional investors, SRI sukuk issuers and arrangers, as well as researchers. A total of 19 experts were approached in which 10 participated in the interview. The thematic analysis technique is used to report the findings.

This study uncovers that social contribution through business activities (i.e. investment in the education sector) is the key motivational drivers for the investors and issuers. Besides, investment risks, lack of performance measurement standards, high transaction costs, risks of return, shortage of enough Islamic bonds, investors’ confidence and lack of awareness are the major challenges for the development of SRI sukuk instruments.

Due to the challenges in finding experts on this subject matter, this study was able to manage only 10 interviews from the participants, which is a small sample size. However, the findings of this study cannot be ignored. Future research should carry out with a large sample size (i.e. at least 30 interviews) to validate the current findings.

This study is among the pioneer in Malaysia, which explores the influencing factors of selecting Islamic bonds as an investment option. This paper provides some valuable implications for investors through discovering the challenges for the growth of SRI sukuk in Malaysia, which can also be applicable in a global setting.

This paper aims to analyse the new standards on Sukuk which was issued by the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) as a result of the strong critics posed by Shaykh Taqi in the end of 2007 that 85 percent of Sukuk issuance were not in line with the teachings of Shariah.

This study reviewed samples of Sukuk prior and after the new AAOIFI pronouncement by focusing on controversial areas such as ownership transfer, pricing and guarantee element. This paper used content analysis approaches to analyse the pronouncement and the samples.

The findings showed that there were negligible changes on the principle term and condition (PTC) of the Sukuk after the pronouncement, thus it did not have much effect in changing the Shariah Advisors and industry players when deciding more authentic principles and decisions.

Based on the findings, it is acceptable that the advisors tried their very best in making efforts to minimize controversial decisions as to suit current financial practices.

The purpose of this paper is to explore the Shariah governance practices of Islamic fund management companies (IFMCs) in Malaysia, with the principal goal of reviewing the need for a comprehensive Shariah governance framework for the Islamic fund management industry.

The study was conducted using a qualitative approach via 14 semi-structured interviews with three companies (i.e. Company A, Company B and Company C) involving face-to-face interviews, telephone interviews and emails. Data from the interviews were recorded and later analysed using content analysis.

The study finds that Shariah governance processes among the IFMC examined are well-managed; and the current regulations issued by the regulators are sufficient to ensure the Shariah compliance of Islamic fund management industry. In spite of the absence of a comprehensive Shariah governance framework for the industry, most Shariah functions (i.e. Shariah risk management, Shariah review and Shariah audit) are performed by the parent company, except for Shariah research. Nevertheless, Shariah research is not an important function in Islamic fund management because the investment instruments are generally selected from a predetermined list of Shariah-compliant investment options.

The study offers an overview of Shariah governance practices in the Islamic fund management industry to policymakers and practitioners for the future development of Shariah governance practices among IFMC.

This is the first paper to study Shariah governance practices in the Islamic fund management industry in Malaysia.

Islamic finance and Halal product sectors are thriving successfully. This chapter is a general review of the perception of Asian consumers on Islamic finance and Halal sectors in the global Halal economy.

The first section will briefly describe the Halal concept in both Islamic finance and Halal industries, and the growth of both sectors in Asian countries. The second part highlights the review of Asian consumers’ perception towards Islamic finance products and Halal products.

The review found that the consumers’ perception towards the Islamic finance products and Halal products is distinctive. This is due to the diversity of Asian countries in terms of geography, religion, culture, ethnic, school of thoughts (madzahib), income per capita and government’s involvement.

The third part of the chapter concentrates on planning towards Halal marketing, which involves the move and future challenges in different layers of industries to gear up and strengthen the Halal economy.

This paper aims to investigate the influence of the determinants (pricing, type of structure, Shariah auditing, Shariah risk and Shariah documentation) and the sukuk legitimacy among Islamic financial institutions using a qualitative approach. The paper further explained the significance of the determinants on legitimacy, evaluated the relationship between sukuk characteristics and sukuk legitimacy and examined the moderating effect of Shariah Supervisory Board (SSB) on the relationship.

The study used a purposive sampling technique to select the target respondents required for the survey (semi-structured interview). This technique is applied by selecting members of SSBs among Islamic financial institutions. A total number of ten members are selected as the sample size for the study based on their experience and basic knowledge of Fiqh Al-Mua’malat and its application in Islamic financial institutions.

The findings revealed that the determinants have a significant impact on the sukuk legitimacy, meaning that there is a positive and significant relationship between the determinants and the sukuk legitimacy. In addition, this study indicates the empirical evidence of the moderating effect of SSB on the relationship between the determinants and the sukuk legitimacy.

This study has added to the literature by examining the determinants of sukuk legitimacy while evaluating the moderating effect of SSB on the relationship. Besides, this might add benefits to the numerous Islamic financial institutions relating to the amendment of its regulatory frameworks with the view to pushing the sukuk market investors to move toward asset-backed structure. In addition, the SSB in central banks must also focus its attention regarding the sukuk legitimacy and its application among the various Islamic financial institutions.

This study has added a new discussion to the body of knowledge, i.e. examining the sukuk legitimacy and its relationship with sukuk determinants; hence, an approach that is not widely discussed in the previous studies. Furthermore, conducting such research in the field of Islamic finance provides novelty in the literature among both emerging and developed economies including Malaysia. This is because to the best knowledge of the researchers, there was no empirical study (within the literature) that combined these variables and evaluated their empirical significance. Accordingly, this would enlighten the Islamic Ummah and propel the society’s intensity toward contributing to knowledge and might further provide clarification on the determinants and the sukuk legitimacy to prospective scholars, precisely on the moderating effect of SSB on the relationship between determinants and legitimacy of sukuk.

The structure of the Malaysian fund market presents a unique setting in which to examine behavioural and cultural differences in the performance of fund managers. The purpose of this paper is to utilise Taylor's extension of the tournament model of Brown et al. who argued that using an exogenous (endogenous) benchmark induces losing (winning) managers to gamble. This presents two competing testable hypotheses that are investigated in the current study.

The authors use a sample of Malaysian unit trusts covering the period 1982 to 2010, applying the non‐parametric cross‐product ratio methodology to test all Malaysian funds and determine whether there is empirical evidence of tournament behaviour. The authors separate Malaysian funds into two main categories (conventional and Islamic) to find out whether different fund types affect the behaviour of the funds as a whole.

Overall, Taylor's theory does not hold in the Malaysian fund market, as conventional funds display tournament behaviour regardless of the benchmark used. However, Islamic funds do not display any significant tournament behaviour.

The current study uses a non‐parametric approach to look for evidence of tournament (gaming) behaviour in the performance of fund managers in Malaysia. In doing so, the authors extend the tournaments literature by examining the performance of three data sets pertaining to the performance and evidence of tournament behaviour in: all managed funds in Malaysia; Islamic funds; and conventional funds. A major motivation for choosing the Malaysian data of unit trusts is to investigate and examine the behaviour of funds operating in an economy that is an emerging market in the rapidly expanding Asian economy; is a market that has a reporting period in line with the calendar year; and is an economy with a strong presence of Islamic funds (Shariah) and Muslim population.

The purpose of this study is to investigate the effect of financial performance (FP) and governance on the accounting and auditing organization for Islamic financial institutions (AAOIFI) disclosure for the Islamic banks.

The authors used the generalized least squares (GLS) estimation for 47 MENASA (Middle East, North Africa and Southeast Asia) Islamic banks (IBs) between 2012 and 2019. In this regression, disclosure is the endogenous variable. The performance and governance measures are the explanatory parameters. The authors use bank's size, leverage and age for control parameters. The robustness of results is verified via generalized method of moments (GMM) estimation method.

The findings indicate that performance measurement has weak effects on AAOIFI disclosure. Only the net interest margin (NIM) measure has a significant positive impact. The return of assets (ROA) and the return on equity (ROE) have a significant negative impact. Furthermore, all Shariah Governance measures have significant effects. Finally, the findings of this study support the governance's positive contribution to the disclosure in IBs.

Through including the whole issues allied to AAOIFI and their impacts on the banks' value, this study provides a significant summary for IBs, policymakers, regulators, AAOIFI and connected authorities across countries. In addition, the findings linked powers between jurisdictions with recommendations on growing the present AAOIFI practices.

This paper offers an original contribution to the accounting professionals and stakeholders who investigate the relationship between disclosure, performance and governance. It is considered as a basis for future studies in the simultaneous relation between these variables. It is crucial for accounting professionals, researchers and stakeholders interesting in the financial disclosure (FD) in IBs.