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1 – 10 of over 2000Shinaj Valangattil Shamsudheen and Ziyaad Mahomed
This study aims to examine the burdening effect of Shariah knowledge on the sales performance of the salesforce at Islamic financial institutions (IFIs) with special reference to…
Abstract
Purpose
This study aims to examine the burdening effect of Shariah knowledge on the sales performance of the salesforce at Islamic financial institutions (IFIs) with special reference to addressing the heterogeneous effects of work experience.
Design/methodology/approach
A total of 335 samples were collected from the sales professionals of IFIs in Malaysia using a purposive sampling technique and the empirical analysis was conducted with the measures of model fit and bootstrapping technique using partial least square structural equation modeling and multi-group analysis.
Findings
Empirical results indicate that the burdening effect of Shariah knowledge is evident among salesforce and the magnitude of the impact remains consistent across the groups of salesforces with different levels of work experience.
Practical implications
Findings suggest respective authorities of IFIs intensify capacity building for their salesforce particularly in the area of Shariah knowledge and nature of underlying Islamic contracts used in the financial products. An insignificant heterogeneous effect of work experience suggests respective authorities that the actions and policy formulations are equally important among the entire salesforce regardless of the number of years of job tenure each salesforce holds.
Originality/value
As customer awareness and knowledge may be influenced by the information transferred via the IFI employees (especially salesforce in IFIs), any information overload (i.e. additional requirement of Shariah knowledge/features) on the IFI employees may, therefore, negatively influence customer patronage and reduce IFI market share. However, the increased information expectation (i.e. Shariah knowledge/features) on IFI employees and its impact on market share along with the heterogeneous effect of work experience has not been documented before. If a burdening effect of Shariah knowledge is identified, this may be a formidable reason for the slowing growth of Islamic finance.
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Muhammad Iqmal Hisham Kamaruddin and Mustafa Mohd Hanefah
This study aims to explore and identify potential challenges and prospects for conducting the professional shariah audit training programme via an e-learning approach during…
Abstract
Purpose
This study aims to explore and identify potential challenges and prospects for conducting the professional shariah audit training programme via an e-learning approach during coronavirus disease 2019 (COVID-19).
Design/methodology/approach
Questionnaires were administered to 296 participants who were enrolled in the professional shariah audit training programme via e-learning during the COVID-19 pandemic outbreak in 2020. These participants were final-year students from selected Malaysian public universities.
Findings
Findings show that several main challenges are faced in adopting an e-learning approach for conducting the professional shariah audit training programme such as the inability to do more hands-on, group and physical activities, different understandings based on academic backgrounds, difficulty in learning practical and technical topics, technical issues and problems during e-learning sessions. These lead to the unsuitability of conducting professional training via the e-learning approach. In terms of prospects of knowledge learnt via the e-learning approach, participants showed that they are able to master all six modules covered in the professional shariah audit training programme via the e-learning approach. These include (1) shariah principles; (2) shariah governance; (3) Islamic financial transactions; (4) shariah risk management; (5) shariah audit planning and programme; and (6) shariah audit fieldwork and communication.
Practical implications
Based on the findings, it is suggested to have more time spent and earlier preparation on the learning contents and sessions, more discussion on actual contents and practical exercises and competency of the trainers in delivering e-learning sessions.
Originality/value
This study is believed to be one among the pioneering studies on the potential challenges and prospects in adopting e-learning for conducting the professional shariah audit training programme due to COVID-19.
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Azam Abdelhakeem Khalid, Hasnah Haron and Tajul Ariffin Masron
The purpose of this paper is to propose the conceptual relationship between competency and effectiveness of internal Shariah auditors in Islamic financial institutions (IFIs).
Abstract
Purpose
The purpose of this paper is to propose the conceptual relationship between competency and effectiveness of internal Shariah auditors in Islamic financial institutions (IFIs).
Design/methodology/approach
Normative and theorizing based on the main sources of Islam, mainly Maqasid al-Shariah theory, has been utilized in this research.
Findings
This study demonstrated how Maqasid al-Shariah or higher objectives of Islamic law have gradually captured the attention of increasing numbers of modern Muslim scholars for solving contemporary issues.
Originality/value
This study uniquely captured Maqasid al-Shariah for the competency of internal Shariah auditor.
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Zaimy Johana Johan, Mohd Zainee Hussain, Rohani Mohd and Badrul Hisham Kamaruddin
The purpose of this paper is to examine the relationship between attitude, subjective norm, perceived behavioural control, religiosity, knowledge and Shariah-compliance with…
Abstract
Purpose
The purpose of this paper is to examine the relationship between attitude, subjective norm, perceived behavioural control, religiosity, knowledge and Shariah-compliance with intention to hold Shariah-compliant credit card (SCCC) amongst Muslims and non-Muslims.
Design/methodology/approach
Researchers used survey questionnaire to collect data and applied a purposive sampling method, then analyzing the data using descriptive statistics and also multi-group analysis of SmartPLS.
Findings
For Muslims, attitude, subjective norm, Shariah-compliance, knowledge and religiosity are positively significant. While for non-Muslims, only attitude and subjective norm are positively significant to intention to hold SCCCs.
Research limitations/implications
The behavioural study only focusses on intention to hold Islamic credit cards, which is constraining the extended model of the theory of planned behaviour (TPB) without the actual performance of the behaviour, which is holding SCCCs. Secondly, the research caters for a single method, namely, quantitative without including the qualitative method to better understand and explore other factors affecting consumers’ behavioural intention. The qualitative part can be carried out by conducting interviews with practitioners, regulators and customers. Thirdly, the cultural dimensions are not combined as parts of TPBs’ antecedents for extended model that could be affecting intention, as Malaysia has diverse ethnic groups with different religious background.
Practical implications
In terms of managerial implications, the findings will further assist financial service providers to develop more effective marketing strategies for Islamic financial products not just to cater for the Muslims but also the non-Muslims, who are increasingly attracted to Islamic banking. As many Muslims are still holding conventional credit cards, it is timely for the Islamic financial institutions to attract them with the SCCCs.
Social implications
Financial marketers are expected to be qualified and well-versed on the different Islamic product structures and also the conventional products. By having such enables them to enlighten and create awareness amongst the targeted consumers in seeking Shariah-compliant financial-related products.
Originality/value
The research will contribute to new theoretical knowledge of an extended behavioural model in relation to customers’ perception towards SCCCs’ acceptance.
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Nurfarahin Mohd Haridan, Ahmad Fahmi Sheikh Hassan, Sabarina Mohammed Shah and Hasri Mustafa
This study aims to investigate the significant role of the Shariah Board (SB) in the innovation of digital finance products through SBs’ interaction with financial technology…
Abstract
Purpose
This study aims to investigate the significant role of the Shariah Board (SB) in the innovation of digital finance products through SBs’ interaction with financial technology (FinTech).
Design/methodology/approach
By using semi-structured interviews, the paper examines 34 views and experiences of scholars and other practitioners from the FinTech and Islamic banking industries to gain an in-depth understanding of SBs’ Shariah compliance roles in FinTech inclusion in Malaysian Islamic banks (IBs).
Findings
Taking advantage of Malaysia’s comprehensive Shariah Governance Framework for IBs, the study highlighted the importance of SBs to better address the opportunities and challenges of financial innovation for the development of IBs with the inclusion of FinTech. The authors found that digital solutions and tools, such as Robo Advisory system and blockchain, enhance SBs’ roles by providing more effective and timely Shariah assurance regardless of the volume of data information and storage.
Practical implications
Given SBs significant roles in conforming to the Shariah, the study contributed significantly to assisting the regulatory and policy promulgation that enhance SBs’ integrity and credibility in response to the growth of IB infrastructures and financial innovation.
Originality/value
To the best of the authors’ knowledge, this is the first study to investigate the significant role of SBs in the innovation of digital finance products through their interaction with FinTech, while prior studies focused on the characteristics and structure of Islamic digital financial products.
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Nurfarahin Mohd Haridan, Ahmad Fahmi Sheikh Hassan and Sabarina Mohammed Shah
This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks…
Abstract
Purpose
This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks (IBs).
Design/methodology/approach
From 11 well-established Malaysian IBs, 16 internal auditors were interviewed to provide an in-depth understanding on how ESA can provide greater assurance to stakeholders in Malaysian IBs.
Findings
This study reported mixed acceptance from internal auditors on the proposed additional governance layer to be undertaken by the ESA. Generally, internal auditors reluctantly agreed that Shariah auditing by the ESA would enhance the quality of Shariah assurance but maintain several practical concerns regarding lack of guidelines on Shariah auditing, the additional cost to be borne by IBs and the possible tensions between the ESA and Shariah board (SB) amid the diverse Shariah interpretations available for experts in the field.
Practical implications
The critical point on the manifestation of an ESA in the contemporary IB practice brought by this study highlights the need for regulation and policy promulgation that embrace a comprehensive approach to Shariah audit process within the religio-ethical dogma of Islamic banking and the pragmatic approach to banking.
Originality/value
This study provides evidence on the expected role and competency of an ESA and explores the implications produced by its implementation in Malaysian IBs. This study also clarifies how IBs should delineate the role of Shariah assurance from SB to ESA.
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Afef Khalil and Neila Boulila Taktak
The purpose of this study is to examine the relationship between corporate governance and financial soundness of Islamic banks. Precisely, this study examines the Shariah Board’s…
Abstract
Purpose
The purpose of this study is to examine the relationship between corporate governance and financial soundness of Islamic banks. Precisely, this study examines the Shariah Board’s characteristics and empirically diagnoses its impact on the financial soundness of Islamic banks.
Design/methodology/approach
In this case, the level of bank soundness is individually measured using the z-score indicator. Regression analyses are applied to test the impact of the Shariah Board’s characteristics on the financial soundness of Islamic banks, using a panel data set of 67 Islamic banks – covering 20 countries during the period 2005–2014.
Findings
The model shows that the size of the Shariah Board has a negative and significant impact on the financial soundness of Islamic banks. However, the Shariah scholar with knowledge in finance/accounting, the presence of Mufti, the interlocked Shariah scholar and the foreign Shariah scholar do not have any significant impact on the financial soundness of Islamic banks.
Practical implications
This study contributes to fill the gaps in the literature that discussed the Shariah Boards’ role in the governance of Islamic banks. In addition, it provides practical implications to the Shariah Boards’ members in the Islamic banks and calls for setting a sufficient number of scholars for each Shariah Board.
Originality/value
With this paper, the authors aim to clarify the relationship between Shariah Board and financial soundness of the Islamic banking, and provide additional insights to the emerging literature of Islamic banking. Contrary to previous research studies, the authors use an additional hypothesis, i.e. the presence of Mufti that has a positive and significant effect on the financial soundness of Islamic Banks. Methodologically, the authors incorporate a new measure to evaluate empirically the impact of Shariah Board members with knowledge of finance and accounting on the financial soundness of Islamic banks.
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Omar Kachkar and Mustafa K. Yilmaz
This study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing…
Abstract
Purpose
This study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing composition of SSBs and the regulatory frameworks and standards of selected Organisation of Islamic Cooperation countries. Diversity characteristics include education, nationality, gender and age.
Design/methodology/approach
A list of all full-fledged Islamic commercial banks (FFICBs) globally has been carefully prepared and confirmed. Conventional banks with Islamic windows, non-commercial banks, takaful companies and other Islamic financial institutions are excluded. The available profiles of 428 SSB members have been scrutinised and analysed. These board members occupy 522 SSB positions in 238 FFICBs operating in 52 countries around the globe. From the regulatory perspective, 12 national and international Shariah governance frameworks and standards have been examined.
Findings
Findings of this paper indicate various levels of diversity in SSBs of the reviewed IBs. The level of diversity in educational background and in the nationality of SSBs can be described as generally acceptable. However, a lack of diversity in gender and age among SSB members is evidently observed in IBs. While the lack of age diversity in SSBs may be relatively justified as a common trend in the composition of corporate boards, SSBs of IBs are seriously lagging behind in gender diversity. On the regulatory level, this study concluded that provisions on diversity as a requirement in SSBs are almost non-existent in the existing regulatory frameworks and standards.
Research limitations/implications
The major limitation of this study is the lack of available information on the SSB members.
Practical implications
This paper provides insights for IBs and policymakers concerned with the corporate governance of IBs and all Islamic financial institutions. First, it offers an excellent bird’s-eye view of the status of diversity in SSBs of IBs. Second, it motivates policymakers and standard-setting bodies to ensure, through the relevant regulatory frameworks, adequate levels of diversity in the composition of SSBs. Diversity in SSBs of IBs and Islamic financial institutions should be given special emphasis, not only in boards and top management positions but also in the workplace. This is of profound significance to the reputation of Islamic finance industry which has been recently under mounting pressure to translate the rhetoric about the Islamic finance industry being ethical, fair, just, equitable and inclusive into genuine implementations.
Originality/value
To the best of the authors’ knowledge, this study is the first of its kind to examine the diversity of SSB members from the regulatory as well as from the implementation perspective.
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Syaima Binti Adznan, Zulkarnain Bin Muhamad Sori and Shamsher Mohamad
The purpose of this paper is to examine and compare the trend of intellectual capital disclosures (ICD) of Islamic banks under the International Financial Reporting Standards…
Abstract
Purpose
The purpose of this paper is to examine and compare the trend of intellectual capital disclosures (ICD) of Islamic banks under the International Financial Reporting Standards (IFRS) and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) regimes over a seven-year period (2012–2018).
Design/methodology/approach
A self-developed checklist was developed to measure the extent of ICD practices of Islamic banks in both regimes.
Findings
The results revealed a moderate increase in ICD practices over the period of the study. However, there is no significant difference in ICD between the two financial reporting regimes i.e. IFRS and AAOIFI-based banks. In fact, most of the IFRS-based banks have better ICD than AAOIFI-based banks throughout the analysis period. This study contributed to the ICD literature by introducing Shariah capital as a new category of information to disclose besides the common disclosure on human capital, relational and structural related information by the Islamic banks.
Practical implications
It is important for Islamic banks to distinguish themselves from conventional banks and ICD can be a conduit to show their uniqueness. The introduction of Shariah capital in this study reflects the main objective of Islamic bank’s existence, and it should become an important element in ICD. In fact, some form of guidelines or policy by regulating agencies could facilitate the ICD by Islamic banks and reflect the truth about their ability to capitalize on Intellectual capital and disclose about these practices to their stakeholders.
Originality/value
The introduction of Shariah capital as a new component to the existing components (i.e. human capital, structural capital and relational capital) of intellectual capital brings a new perspective to the research on ICD of Islamic banks. This paper further contributes to the scarce evidence of ICD of Islamic banks globally.
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Nazrul Hazizi Noordin and Salina Kassim
The purpose of this paper is to investigate the empirical linkage between the composition of Shariah Committee and the extent of Shariah governance disclosure in 16 licensed…
Abstract
Purpose
The purpose of this paper is to investigate the empirical linkage between the composition of Shariah Committee and the extent of Shariah governance disclosure in 16 licensed Islamic banks in Malaysia.
Design/methodology/approach
This paper adopted a multiple regression analysis to test the association between the composition of Shariah Committee and the extent of Shariah governance disclosure. A disclosure index was developed to measure the extent of Shariah governance disclosure made by the Islamic banks. Whereas to measure the extent of Shariah governance disclosure, this study used content analysis as a method of coding qualitative information in the annual reports.
Findings
Using 2009 data, the study found a significant association between different compositions of the Shariah Committee in the Malaysian Islamic banks and their Shariah governance disclosure level before the introduction of the Shariah Governance Framework (SGF). However, because of less variation in the composition of Shariah Committee after the introduction of SGF 2010, a weak linkage was found between the composition of Shariah Committee and the extent of Shariah disclosure of Malaysian Islamic banks in 2013.
Research limitations/implications
Findings of this study offer several implications for further improvements of the Malaysian Islamic banking sector in particular, and other Islamic banks globally. As better composition of Shariah Committee in terms of its size, academic background and other relevant expertise would result in effective monitoring system leading to better practices of Shariah disclosure, this finding highlights the relevance and important role of the Shariah Committee in improving voluntary Shariah disclosure level of the Islamic banks. This finding suggests that ample focus has to be channelled in strengthening the composition of Shariah Committee in crafting future development of SGF in Malaysia. It is also suggested that Islamic banks need to give priority in providing more education and training in various areas of expertise to their Shariah Committee members that would result in greater confidence of investors, stakeholders and the society on the information disclosed by the banks.
Originality/value
The novelty of this paper lies in highlighting the importance of different composition of Shariah Committee in determining the extent of voluntary disclosure made on Shariah matters by the Islamic banks.
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