This paper aims to investigate the origins and evolution of IslamicBanking and Finance from the early days of Islam up to the formal establishmentof Islamic banks in the sixties of the last century. It also sheds light on thebanking practices in the later parts of Islamic history which is an almost unresearchedarea. It records the existence of interest free lending societies at theend of the 19th century and the situation preceding the development of modernIslamic banks in the (...) second half of the twentieth century. The paper concludesthat Islamic banking was an attempt to practice an aspect of economic life inan Islamic way and it first emerged in rural and agricultural economies andnothing to do with the petrodollar or oil boom of the Middle East as usuallyput forward. (shrink)

Fethullah Gülen, a leader of interfaith and intercultural dialogue, writes of “humanity’s vicegerency” that includes “reaping the bounties of the Earth . . . within the framework of the Creator’s orders and rules.” What might this mean for international business ethics in general, and the expansion of Islamic banking practices and global financial ethics in particular? Forthrightness and transparency are critical in the contemporary development and spread of what are nominated Islamic or shariah-compliant financial products and services. (...) This paper seeks to explore the advantages of acceptably disparate analyses of shariah-compliance, by suggesting how a Gülen-like religion-state symphonia can evolve. The resulting arrangement of financial affairs would thus allow for real diversity inbanking options for all sorts of clients, carving out a space for secular and religious-based institutions, alike, in the global marketplace. (shrink)

The current economic crisis arose in large part from financial activities in which capital was practically and logically alienated from real economy. This essay examines the exploitative logic of modern finance while considering two alternative models—microfinance and Islamic banking. These models will be considered against the backdrop of medieval arguments over usury, notably the debates between Franciscans and Dominicans surrounding the lending institutions known as monti di pietà. While noting that either model is decidedly preferable to current (...) normative banking practices, this essay argues for the interest-free logic of Islamic finance against the logic of usury insofar as usury lends itself to a double alienation—of lender from borrower and of profit from value. (shrink)

Islamic Banking and Financial Crisis, edited by Habib Ahmed, Mehmet Asutay, and Rodney Wilson, definitely has merit. The book comes at a time when conventional financial institutions face stress and, in many instances, utter failure as a result of the 2008 global financial crisis. While the book is not designed primarily as a retrospective, it does offer an opportunity for reflection.

It aimed to identify the strategic creativity in Islamic banks in Palestine between reality and implementation. The study adopted the descriptive analytical approach. A questionnaire was designed as a tool for the study. The study community consisted of all employees in Islamic banks from the top and middle management and the study has been applied to the Palestinian Islamic bank and the Arab Islamic Bank. The comprehensive inventory method was used, given the small size of the (...) study sample, as questionnaires were distributed to (175) employees, and a number of (5) categories were chosen from each branch of the bank(general manager, deputy general manager, director Branch, department head, department manager). (164) questionnaires have been used Recovered with a recovery rate of (93.71%). The study showed a number of results, the most important of which is the availability of dimensions of strategic innovation at a high level in Islamic banks in Palestine with a relative weight of (82.22%). In addition, that there are no differences between the averages estimates about the reality of the study variables in Islamic banks due to (gender, age group, educational qualification, number of years of service, job title). The study also presented a set of recommendations, including that the bank should provide the environment and the appropriate climate for employees to invest their intellectual energy, urge them to strategic creativity, and deal fairly with all creative ideas regardless of their source. (shrink)

Islamic financing instruments can be categorised into profit and loss/risk sharing and non-participatory instruments. Although profit and loss sharing instruments such as musharakah are widely accepted as the ideal form of Islamic financing, prior studies suggest that alternative instruments such as murabahah are preferred by Islamic banks. Nevertheless, prior studies did not explore factors that influence the use of Islamic financing among non-financial firms. Our study fills this gap and contributes new knowledge in several ways. First, (...) we find no evidence of widespread use of Islamic financing instruments across non-financial firms. This is because the instruments are mostly used by less profitable firms with higher leverage. Second, we find that profit and loss sharing instruments are hardly used, whilst the use of murabahah is dominant. Consistent with the prediction of moral-hazard-risk avoidance theory, further analysis suggests that users with a lower asset base are associated with murabahah financing. Third, we present a critical discourse on the contentious nature of murabahah as practised. The economic significance and ethical issues associated with murabahah as practised should trigger serious efforts to steer Islamic corporate financing towards risk-sharing more than the controversial rent-seeking practice. (shrink)

Islamic finance has experienced considerable growth worldwide interms of deposits and assets of Islamic banks over the last 40 years, but showslittle signs of achieving maturity. Almost all Islamic finance products currentlyis use are mere replicas of their conventional counterparts. This study followsthe archival research strategy of Bryman, and analyses the literatureon Islamic finance theory and products and practices in order to ascertainthe reforms needed for the maturity goal. The paper proposes adoption ofa (...) new law regarding money, different policy approaches, new structures offinance for shifting to risk-based financing, new models, procedures and somefresh thought in order to relate banking and finance to the real economy. Itrecommends a leading role for Islamic economists for effective reforms in themonetary and credit system in order to ensure that all financing is based ongoods, services, stocks or securities representing real assets in line withthe Shariʽah principles. The suggested policy measures are expected to leadto social inclusion and harmony in the interests of all stakeholders in businessand finance transactions. (shrink)

Islamic Business Finance is based on strong ethical regulations as suggested by Islamic Literature, such as the Quran and the Traditions of the Prophet of Islam, and could be considered as a subclass of the wider subject of ethical standards in business. This book highlights the basic principles of Islamic Business ethics and their implication in today's global business environment. It highlights the most important features of Islamic banking and finance in relation to (...) the core principles of Shariah law. It is the most comprehensive book to date, in terms of the number of Quranic verses and traditions of the Prophet relating to this subject, which are interspersed throughout the text. It explains how ethics are defined both in general terms and within the context of an Islamic perspective. In addition, it provides a logical interpretation of Islamic principles of business ethics through the use of contemporary business case studies. Topics such as digital currencies, money laundering, etc. are discussed at length. This book also discusses the new and emerging ethical issues faced by business and industry globally. This book will be a valuable reference guide for students, teachers and researchers of Islamic banking and finance. (shrink)

The main aim of this study is to undertake a critical examination of the ethical and developmental performance of an Islamic bank as communicated in its annual reports over a period of 28 years. Islami Bank Bangladesh Limited’s ethical performance and disclosures are further analyzed through interviews conducted with the bank’s senior management. The key findings include an overall increase in ethical disclosures during the study period. However, the focus on various stakeholders’ needs has varied over time reflecting the (...) evolving nature of the Islamic finance industry over the last three decades. Based on a secular economy, IBBL focused in the first two decades on the “Particular” Shariah compliance disclosure as a way of establishing its reputation and differentiating itself from conventional banks in a dual banking system. Post 2005, the ethical performance and disclosure shifted to more “Universal” disclosures such as sustainability, charity, employees, and community related disclosures signaling responsible conduct and the bank’s adoption of a “wider stakeholder approach.” However the bank is still failing to provide full disclosure on certain significant categories such as sources and uses of disposable income, thereby contradicting the principles of full and comprehensive disclosure and accountability. In addition, the structure of IBBL’s investment portfolio reveals an overreliance on debt-based financial instruments and a shortcoming in fulfilling the developmental and social objectives of Islamic finance. This is evidenced by the “qualified” Shariah Supervisory Board reports that the bank consistently received. This research provides further evidence that Islamic banking and Finance in its current practices reflect the “global” and the “local” influences in an era dominated by global conventional finance. (shrink)

With the growth of Muslim economies, both at the national and international levels, the issue of riba (interest, usury) poses great difficulties. The charging or receiving of riba has been forbidden in Islam, which presents a major problem to financial institutions that charge interest. Muslim legal scholars belonging to all schools of legal thought have reinterpreted scriptural sources to accommodate drastic economic changes; practical considerations have forced Muslim groups, both of Sunni and Shi'ite persuasion, to justify interest-based banking and (...) other institutions of finance. As a matter of religion, the status of interest is far from resolved. However, within the legal tradition, there are ethical principles like maslahah (public good) and la darar wa la dirar (no harm, no harassment) that will determine the future direction of a Muslim search for a morally responsible economy. (shrink)

This paper proposes a model to study the arrangement of Islamic project finance with the participation of the government as a provider of loan guarantees. The owner-shareholders initiate a project and raise funds by issuing Islamic profit-loss sharing mudarabah certificates. The government intervenes in providing financial guarantees in order to enhance the creditworthiness and increase the mudarabah capital capacity of the project. Our work raises several policy implications related to the structuring of Islamic project finance (...) and the participation of both government and multilateral public agencies such as the Islamic Development Bank. It provides a unifying framework for the improvement of access to funds for Islamic projects and gives a rationale for government intervention in the arrangement of these projects. (shrink)

Deferred sale, in the Islamic Banking and Financeworld widely known as Bai’ bi thaman ajil, is used as an extension toProfit-sale ; both sales complement each other. The Profitsalesells the commodity with profit over the cost price, and BBA plays the roleof receiving that payment on deferred or instalment basis. BBA has becomethe “premier consumer financing facility” for the Islamic financial institutions. This paper deals with deferred sale precisely. It looks into its origin andits transition from void (...) to valid sale. Its application as trade contract and itsmodern application as financing tool is analysed in the light of the maqāṣidSharīʿah. (shrink)

We examine the role of religiosity on the financing activities in both Islamic and conventional banks in Indonesian provinces by using five different measures of religiosity: number of Islamic schools, hajj application, number of Islamic seminary schools, number of Mosques, and number of certified halal products. Based on regression analysis, the results show that both Islamic and conventional banks provide more financing in religious provinces. Religiosity also helps in reducing the volume of non-performing financing. Our the (...) results are still qualitatively valid after taking into account endogeneity issue that emanates from omitted variables (i.e., unobservable beliefs, ideas, and attitudes), and possible reverse causality between religiosity and the total amount of financing at the province level. (shrink)

The concept of Islamic economics as a coherent economic and financial system basically does not exist. Some authors take it, however, for simplicity, under-standing by this description any entities and legal regulations, mainly in the financial markets, driven – either declaratively or in fact – on the principles derived from religious precepts of Islam. The emphasis is put on so-called inter-est-free banking, which involves the concept of usury (riba). By referring to the essence of Islamic economics, the (...) author shows the dif-ferences and similarities between "interest-free" Islamic banking and conven-tional banking (Western-style). It turns out that the differences are almost exclu-sively at the level of declarations and similarities that arise from attempts to circumvent religious regulations, as in the riba, are much more numerous than it might seem. They result from the need to fuse Islamic finances with global fi-nancial markets, which at least at the point of contact eliminates the capability of maintaining the autonomy of the local banking system. In addition, interest-free Islamic banking development meets an obstacle in the shape of the market pres-ence of conventional banks, which are its natural ideological competition. Thus, although the Islamic Development Bank estimates the size of the market of the Islamic system of financial services in 2015 at between 2 to 8 trillion dollars, one seems to be entitled to conclude that, in practice, between Islamic economics and capitalist economies of the West, at least in terms of banking services, the dif-ferences are purely semantic, and both Western and Islamic deposit, credit and investment products are in fact identical. (shrink)

The evidence from the recent financial crisis in the USA indicates the importance of ethical decision making in the banking and finance industry. This study surveyed 90 banking and finance professionals and students in Vietnam to examine the differences in their ethical decision making. The questionnaire consisted of eight vignettes describing practical ethical dilemmas which banking and finance professionals may face in their daily work. We found significant differences in ethical decision making between these (...) two groups in their overall ethical scores and in four out of eight vignettes. We also conducted a 3-h ethics training programme for these professionals and students and found that teaching ethics was more effective for students than working adults in the banking and finance industry. These findings are important as they show how banking and financial institutions can make workplace environments more conducive to ethical decision-making by enhancing ethics education for both newcomers and existing professionals. (shrink)

Usury originally and simply meant the practice of charging interest on loans. This practice was forcefully condemned and generally banned in both Ancient and Medieval times. Indeed, prohibitions against interest can be found in the traditions of all the major religions: Hinduism, Buddhism, Judaism, Islam, and Christianity – compare, for instance, the commandments of the Hindu lawmaker Vasishtha, and the biblical story of how Jesus cast the moneylenders out of the temple (Matthew 21:12). As interest started to become socially acceptable, (...) however, usury came to mean the charging of (legally or morally) excessive or exorbitant rates of interest, and this is also how it is commonly used today. Thus, although many people now may regard as usurious so-called payday loans – which sometimes come with up to 1,000 percent interest – we do not generally regard as usurious the normal bank practice of charging for loans at regulated interest rates. Modern Islam still contains a general prohibition against interest, however, and many countries still have at least partial usury laws – most often setting an upper limit on acceptable interest rates. (shrink)

This research investigates the impact of auditor experience and ethical perspectives on audit quality and financial reporting in Sharia banks in Indonesia. Utilizing a quantitative approach and employing Partial Least Squares Structural Equation Modeling (PLS-SEM), the study reveals a positive and significant relationship between auditor experience and both audit quality and the quality of financial reports. Ethical perspectives of auditors are also found to positively influence these outcomes. The findings highlight the importance of investing in auditor expertise and ethical considerations (...) to ensure the integrity and reliability of financial information in Sharia banks. The study contributes valuable insights for practitioners and policymakers in the Islamic finance sector, emphasizing the crucial role of auditor experience and ethical perspectives in enhancing audit quality and financial reporting in Sharia banks. (shrink)

Mankind is faced with a number of serious problems that demand an effective solution. The prevalence of injustice and the frequency of financial crises are two of the most serious of these problems. Consisting of an in-depth introduction along with a selection of eight of Muhammad Umer Chapra's essays--four on Islamic economics and four on Islamic finance--this timely book raises the question of what can be done to not only minimize the frequency and severity of the financial (...) crises, but also make the financial system more equitable. The author considers the origins of Islamic economics and outlines its development and underlying principles. He compares the approach taken to ethics and economics in Islam with that taken in the West, considering whether lessons can be applied to the global financial architecture in order to mitigate against financial crises. The book also examines the case against interest and looks at both innovation in Islamic finance, as well as challenges facing the industry. Written by a leading authority in the field, this book will be a stimulating resource for students and researchers in Islamic economics and finance, as well as providing valuable insight to all of those with an interest in financial systems and their interaction with society. (shrink)

(2014). Epistemological foundations for the assessment of risks in banking and finance. Journal of Economic Methodology: Vol. 21, No. 2, pp. 125-138. doi: 10.1080/1350178X.2014.907438.

The primary objective of this research was to investigate the impact of Commitment Towards Islamic Banks, Attitude Towards Islamic Bank, Islamic Religious Obligation, trust, and Hijra intention on customer loyalty towards Islamic banks. Additionally, the study aimed to explore the moderating role of customer trust and the mediating effect of hijra intention. The research employed a cross-sectional research design and a quantitative approach, gathering data from customers of Islamic banks in the Kingdom of Saudi Arabia. (...) A questionnaire, based on previous studies, was designed for data collection and distributed to respondents through purposive sampling. The collected data underwent analysis using AMOS. The study revealed that Commitment Towards Islamic Banks, Attitude Towards Islamic Bank, and Islamic Religious Obligation positively influence hijra intention. Furthermore, trust and hijra intention significantly impact loyalty towards Islamic banks. The results also supported the moderating influence of trust and the mediating role of hijra intention. This research contributes to the existing body of literature in religious studies, offering valuable insights that can assist banking strategists in customer retention efforts. (shrink)

This study aims to explore whether a discrepancy exists between the ideal and communicated (disclosed) ethical identity of Islamic banks in Asia and, further, whether there is any association of communicated ethical identity with financial performance. To achieve the objectives, the study analyses data derived from annual reports of Islamic banks in Asia for the period 2006–2010. The results suggest that out of the seven banks studied, three of them are above average and the rest suffer from disparity (...) between the ideal and communicated ethical identities. Further, the study shows that the disclosure of a vision and mission statement; board of directors and top management; zakah, charity, and benevolent loans; and Shari’ah supervisory boards are negatively associated with performance, while the disclosure of products and services and commitment toward employees are positively associated with performance. (shrink)

The current study proposes a novel conceptual model in which Islamic work ethics has a mediating role in the relationship between servant leadership and employees’ life satisfaction within Pakistan’s banking sector. The model draws on the theory of leader-member exchange. Data from a sample of 240 were evaluated using structural equation modeling using SmartPLS 3.2.7 software. The findings indicate that servant leadership significantly impacts employees’ life satisfaction. Furthermore, Islamic work ethics mediated this effect. This study introduces ground-breaking (...) bank inputs by creating a new integrated model based on LMX theory. While the impact of several dimensions of Islamic work ethics on employees’ life satisfaction has been widely investigated, the present study is the first to explore the roles of servant leadership and Islamic work ethics in leveraging bank employees’ life satisfaction. The results suggest that bank managers should enact servant leadership in their business and serve their employees ethically to improve their life satisfaction. Additionally, this study provides key theoretical contributions to the literature on Islamic banking. (shrink)

This article presents a theory of how the consumption of Islamic products may promote morally consistent behavior over time. We identify and examine three unique meta-characteristics (MCs) of Islamic ethics: ubudiyah (subservience to God), akhirah (focus on the hereafter or the long-term), and tawado (being modest while doing an ethical act). In four experiments, we show that after consumption of an Islamic banking product, MCs produce moral consistency or repeat ethical behavior, which is one major objective (...) of an ethical system. We also show that the absence of MCs results in moral inconsistency, that is, unethical behavior follows earlier consumption of an Islamic banking product due to the mediating psychological mechanism of moral licensing. Hence, it is not only the enactment of general ethical practices, rather the enactment of ethical practices in the specific context set by the MCs through which Islamic ethical system promotes ethical conduct and prevents unethical conduct. The findings have implications for Islamic ethical system and Islamic banking. (shrink)

Bank competition promotes enterprises to obtain credit funds through market mechanisms, and a combination of industry and finance has an important influence on establishing bank-enterprise relationship. Based on data of 2,245 manufacturing enterprises and branches of commercial banks in China from 2007 to 2019, this research establishes a moderated mediation model to verify whether CIF has a moderating effect on bank competition on enterprise innovation. The results are as follows. First, bank competition can both directly and indirectly promote enterprise (...) innovation by alleviating financing constraints. Second, CIF has no moderating effect on the direct effect of bank competition on enterprise innovation but has a negative moderating effect on the first half of mediating effect. (shrink)

Islamic banking is based on moral foundations that make it distinct from conventional banking. Some argue that because of its foundation in Islam, Islamic banking may represent a more morally appealing alternative. Yet, evidence shows that this is not the case. Indeed, the current practice of Islamic banking has not been able to achieve its goals which are based on Islam's moral values: to enhance justice, equitability, and social well-being. This essay examines the (...) extent to which Islamic banking is ethical and concludes that the practice of the industry does not seem to be de facto ethical from the Islamic perspective of ethical values. It only consists in trading the same instruments of conventional banks without genuinely enforcing Islam's ethical vision. The practice of Islamic banking misrepresents Islam and does not contribute to solving social problems. The interaction between maqasid al-shari᾽a and qiyās provides a supplementary tool for interpreting the failure of the prior in terms of the practical misuse of the latter by Islamic banks. This essay provides an interpretive approach to the current debate about why Islamic banking has failed and suggests ways to move cautiously in the future. (shrink)

This study utilises higher objectives postulated in Islamic moral economy or themaqasid al-Shari’ahtheoretical framework’s novel approach in evaluating the ethical, social, environmental and financial performance of Islamic banks.Maqasid al-Shari’ahis interpreted as achieving social good as a consequence in addition to well-being and, hence, it goes beyond traditional (voluntary) social responsibility. This study also explores the major determinants that affectmaqasidperformance as expressed through disclosure analysis. By expanding the traditionalmaqasid al-Shari’ah,, we develop a comprehensive evaluation framework in the form of (...) amaqasidindex, which is subjected to a rigorous disclosure analysis. Furthermore, in identifying the main determinants of themaqasiddisclosure performance, panel data analysis is used by including several key variables alongside political and socio-economic environment, ownership structures, and corporate andShari’ahgovernance-related factors. The sample includes 33 full-fledged Islamic banks from 12 countries for the period of 2008–2016. The findings show that although during the nine-year period the disclosure ofmaqasidperformance of the sampled Islamic banks has improved, this is still short of ‘best practices’. Through panel data analysis, this study finds that the Muslim population indicator, CEO duality,Shari’ahgovernance, and leverage variables positively impact the disclosure ofmaqasidperformance. However, the effect of GDP, financial development and human development index of the country, its political and civil rights, institutional ownership, and a higher share of independent directors have an overall negative impact on themaqasidperformance. The findings reported in this study identify complex and multi-faceted relations between external market realities, corporate andShari’ahgovernance mechanisms, andmaqasidperformance. (shrink)

This conceptual paper explores and compares the ethical dimension of Islamic and so-called ethical banks. The investigation is made in two succeeding steps. First, an individual analysis as regards the respective level of correspondence between ethical principles and business practice. For the latter, a time-based perspective is adopted. Second, a side-by-side comparison of their overall “ethical coherence gap”. The results show that this gap is wider in the case of Islamic banks. The final part of the paper draws (...) up three different scenarios for future development of these financial institutions where their ethical coherence is enhanced. (shrink)

There is a growing global interest in social responsibility and sustainability across all sectors. Other than economic performance, stakeholders are now also concerned about the social and environmental impacts of corporations. Additionally, stakeholders are obtaining a higher salience level and expect organisations to operate sustainably. The banking sector has not been an exception, as banks can have significant impact on their customers, employees, and society in various ways. Given the intertwined links of Islam and ethical principles, it is expected (...) that Islamic banks will show a high level of commitment towards social responsibility (SR) and ethical practices. The current study investigates this issue by examining the annual reports of three fully-fledged Islamic commercial banks in Indonesia over the period of 2007 to 2011. It was found that only two of the investigated banks had continuous improvement in their SR disclosure. Additionally, it was revealed that the highest disclosures have been for ‘corporate vision’ and ‘board of directors and top management’, while the lowest disclosures were evident for ‘environment’ and ‘product, services and fair dealing with supply chain’. (shrink)

Islamic Banks (IBs) are considered as having ethical identity, since the foundation of their business philosophy is closely tied to religion. In this article, we explore whether any discrepancy exists between the communicated (based on information disclosed in the annual reports) and ideal (disclosure of information deemed vital based on the Islamic ethical business framework) ethical identities and we measure this by what we have termed the Ethical Identity Index (EII). Our longitudinal survey results over a 3-year period (...) indicate the overall mean EII of only one IB out of seven surveyed to be above average. The remaining six IBs suffer from disparity between the communicated and ideal ethical identities. We further found the largest incongruence to be related to four dimensions: commitments to society; disclosure of corporate vision and mission; contribution to and management of zakah, charity and benevolent loans; and information regarding top management. The results have important implications for communication management if IBs are to enhance their image and reputation in society as well as to remain competitive. (shrink)

This paper offers novel insight into the Islamic banking business model by considering the effect of investments in human capital and corporate governance features on the market performance of Islamic banks. Based on a sample of 47 banks operating in different regions during the 2005–2010 period, and controlling for firm-specific characteristics, this paper finds investments in human capital to have a significant positive impact on the market value in the pre- and post-financial crisis period. Based on a (...) market measure, this paper finds board size and CEO power to have a significant positive impact, while the size of Shariah Supervisory Board has the opposite effect on market performance. The results further reveal that the Islamic banking sector is not a homogeneous group, with full-fledged Islamic banks having lax corporate governance mechanisms and large size, while their counterparts, Islamic Shariah-windows, having strong corporate governance mechanisms tend to invest more in human capital to yield positive market value. Overall, the analysis suggests that the financial crisis may have further spurred the impact of investments in human capital on the market performance. (shrink)

Using data on submitted and published manuscripts in Feminist Economics from 1995 to 2019, we examine differences in method and scope used by authors residing in the Global North and Global South. We specifically focus on research methods, intersectional analyses, region of analysis, and co-authorship status. Further, using logistic regression models, we examine the relationship between authors’ location and use of research methods. We find authors in the Global South are more likely to engage in empirical and mixed-methods papers compared (...) to Global North authors in our sample. Moreover, a greater share of Global South authors engage in intersectional analysis and exhibit geographical focus on developing countries. Drawing insights from the Feminist Economics manuscripts data, we argue that encouraging Global South research can contribute to the goals of the field of feminist economics – aimed at inclusivity, diversity of standpoints, and plurality in research methods, thereby improving overall economic research. (shrink)

The banking sector is one of the most important economic sectors in all countries. It represents the backbone of economic life, as it acts as a mediator between savers and investors and provides them with many banking services to meet the requirements of the economic process. This study aimed to define the concept of financial services provided by Islamic banks, their characteristics, and their most key features, while addressing the level of quality of banking services and (...) the extent to which they meet the desires of customers. This study was divided into two sections: Section One: The concept, characteristics, and features of banking services. Section Two: Banking services provided by Islamic banks. (shrink)

We examined the current field identity of Islamic banks and its evolution. We conducted interviews with 44 Sharia (Islamic law) scholars and related professionals in the fields of Islamic and conventional banking, representing nine jurisdictions. We found that Islamic banks are still hybrid organizations belonging to two equally powerful fields of Islamic law (Sharia) and conventional banking. Consequently, Islamic banks abide by two completely different institutional logics. The hybrid identity of Islamic (...) banks resultantly became static due to institutional pressures exerted by both root fields. We discuss how hybrid fields evolve focusing on the conditions that prevent hybrid field identities from becoming independent. We also contribute to the literature on elastic hybrid identity of organizations by theorizing an elastic fatigue model. Finally, we suggest some practical motions to boost the static hybrid identity of Islamic banks and transform it to an elastic one. (shrink)

Modern military engagements are made possible by a state’s ability to easily acquire revenue. By either taking the money from its citizens via taxation, borrowing funds through bonds or loans from private financiers or other governments, or inflating the currency by issuing bank notes without the backing of specie or another commodity, Western governments wield enough power over money and banking to fund any venture. British involvement in the Napoleonic Wars was no exception to the rule. This paper examines (...) the role of the British government, including William Pitt and Parliament, and the Bank of England in manipulating the currency, by borrowing, taxing, and issuing Bank notes to fund the war with Napoleonic France in the late eighteenth and early nineteenth centuries. (shrink)

Based on fieldwork among Islamic bankers globally, this book questions the equivalence between money and ethnography and asks whether money can ever be adequate to the value backing it. "I enjoyed this book mightily.

This paper examines the relationship between corporate social responsibility and financial performance for Islamic banks in the Gulf Cooperation Council region over the period 2000–2014 by generating CSR-related data through disclosure analysis of the annual reports of the sampled banks. The findings of this study indicate that there is a significant positive relationship between CSR disclosure and the financial performance of Islamic banks in the GCC countries. The results also show a positive relationship between CSR disclosure and the (...) future financial performance of GCC Islamic banks, potentially indicating that current CSR activities carried out by Islamic banks in the GCC could have a long-term impact on their financial performance. Furthermore, despite demonstrating a significant positive relationship between the composite measure of the CSR disclosure index and financial performance, the findings show no statistically significant relationship between the individual dimensions of the CSR disclosure index and the current financial performance measure except for ‘mission and vision’ and ‘products and services’. Similarly, the empirical results detect a positive significant association only between ‘mission and vision’ dimension and future financial performance of the examined banks. (shrink)

This study is based on the objective conditions of Islamic banking in Indonesia, which have not carried out their social functions optimally. Based on reports from the financial services authority, Indonesia bank and several related research, the efforts to optimise the social function of Islamic banking still encounters several problems related to the distribution of banking funds that are more focused on business interests, lack of real business run by Islamic banks, customer funds that (...) are mostly deposited in Indonesia bank and have not been distributed to the real sector effectively, to banking activities by referring to the capitalistic economic paradigm and not fully referring to sharia guidelines. The results of the study of documents, literature and actual phenomena using descriptive and holistic analysis methods indicate that the degradation of the social function of Islamic banking appears as a result of a lack of understanding of the concept of Islamic economics based on the construction of Islamic social theology. The lack of understanding of banking management towards Islamic social theology has created a gap between the practical and conceptual sides of Islamic social theology, which in turn has an impact on the lack of social commitment from related parties in the implementation of Islamic banking activities. Strengthening the practical side of Islamic social theology is a necessity to overcome the existing problems.Contribution: The article contributes to the discourse on the application of Islamic social theology to Islamic banking practices. It aims to contribute to theological thought in Islam in order to strengthen the social function of Islamic banking, by focusing on the main objective of Islamic economics: al-falah or the achievement of spiritual and material prosperity. (shrink)

Bu çalışma, Türkiye’deki Şer’i yönetişim aktörlerinden olan banka içi danışma komitelerinin Şer’i yönetişimdeki yeri ve önemini keşfetmeyi amaçlamaktadır. Bu minvalde nitel araştırma desenlerinden olan durum çalışması tercih edilmiş ve 5 danışma komitesi üyesi ve 2 danışma komitesi başkanıyla yarı yapılandırılmış mülakatlar gerçekleştirilmiştir. Mülakatlar neticesinde toplam 625 dakikalık ses kayıtları elde edilerek çözümlenmiş ve 85 sayfalık metin elde edilmiştir. Elde edilen metinler ve görüşme notları ATLAS.ti programı aracılığıyla analiz edilerek BİDK, Şer’i yönetişim ve Merkezi Danışma Kurulu olmak üzere 3 ana tema (...) ve bunlara bağlı 26 alt temaya ulaşılmıştır. İlgili temalar BİDK’nin Türkiye’deki Şer’i yönetişimdeki yeri ve önemini keşfetmek açısından zengin bir içerik sunmaktadır. Türkiye’deki Şer’i yönetişimi ele alan çalışmaların literatürde sınırlı olması ve bu çalışmanın hem saha çalışmasına hem de Türkiye’deki Şer’i yönetişimde yer alan, katılım bankacılığının tarihine eş bir ömre sahip BİDK’ları konu etmesi literatürde özgün bir yere sahip olacağına işaret etmektedir. Islamic finance has developed the Shariah governance mechanism to ensure compliance and control of IFIs with the principles of Islamic law. However, the levels of Shariah governance are different from each other due to the different legal affiliations of each country, the level of development of Islamic finance, and regime differences. International Islamic financial institutions such as Islamic Financial Services Board and The Accounting and Auditing Organization for Islamic Financial Institutions have published standards to define the general lines of Shariah governance and have brought Shariah governance practices to a certain point, at least in principle. After the Shariah governance standards of IFSB and AAOIFI, studies on Shariah governance have increased rapidly. By 2010, while there were only 18 publications on Shariah governance in the two most well-known indexes, this number increased to 42 in 2015 and 159 in 2020. This academic interest shows that Shariah governance issues are followed closely. In this context, there have been some remarkable developments at the regulatory and supervisory level in terms of Shariah governance in Turkey, and the TKBB Advisory Board was established in 2018, bringing one step closer to international Shariah governance practices. (shrink)

Business Ethics, the Environment & Responsibility, Volume 31, Issue 2, Page 438-452, April 2022.

Given the nature and importance of Islamic banks in recent times, we can expect them to have significant intellectual capital anchored in their Sharia‐based knowledge and expertise. However, we know very little or nothing about how and why intellectual capital‐related information is provided in their corporate reports. We fill this gap in our existing knowledge of the field with a view to enhance relevant literature. As far as we know, this article is one of the earliest exploratory attempts to (...) examine intellectual capital reporting practices of an Islamic bank. We have undertaken a longitudinal (2001–2015) case study related to the intellectual capital reporting practices of an Islamic bank. Key results include significant rise of intellectual capital reporting over time, dominance of internal capital‐related items in intellectual capital reporting profile and the dynamics of changes in intellectual capital reporting practices over time. Through an institutional theory lens, we explain that this is due to the changes in the external institutional environment and various intra‐organisational factors such as strong ethical culture, unique knowledge base (Sharia), and corporate governance regime. (shrink)

This paper demonstrates the political perspective of corporate social responsibility disclosures and, drawing on Weber’s notion of traditionalism, seeks to explain what motivates companies to make such disclosures in a traditional setting. Annual reports of 23 banking companies in Bangladesh are analysed over the period 2009–2012. This is supplemented by a review of documentary evidence on the political and social activities of corporations and reports published in national and international newspapers. We found that, in the banking companies over (...) the period of study, apparently neutral, corporate, philanthropic activities disclosed and promoted in CSR reports are inextricably linked to powerful leaders’ personal projects and the ruling party’s agendas. We have demonstrated elements of traditional societies, including personal loyalty and the public display of loyalty, the master–servant relationship, and obedience to personal rather than formal authority, provide an understanding of why banks have employed politically charged CSR disclosure strategies. The paper contributes to disclosure studies where political motivations of corporate disclosure rarely discussed. The paper extends the debate on political CSR by demonstrating that the role of family and familial values at the organisational and national levels may be much more important when it comes to CSR disclosure and activities. (shrink)

The general relationship between a bank and customer is contractualin nature. For conventional banks, the banker-customer relationship is basedon the debtor-creditor relationship with the bank earning a profit from a spreadmade between interest charged on the borrower of funds and interest paid tothe depositors. In Islamic banking, due to the different contractual transactionsof Islamic banking operation, it is based on a multi-contractual relationships.However, bank consumers perceive that banks enhance their profits by treatingconsumers unfairly and failing to (...) take responsibility when things go wrong.This study examines the duty of care of conventional and Islamic banks towardsbank consumers. It also focuses on the Islamic banks’ duty of care from theperspective of maqāṣid al-Sharī‛ah, to those who use their services. Adoptingthe doctrinal analysis method, this study analyses and compares the duty ofcare of both conventional and Islamic banks. Findings of this study includethat misconduct by banking industries remains rife and that unfair treatment ofcustomers are frequent. As for Islamic banks, the maqāṣid al-Sharī‛ah basedduty of care is found missing in their Islamic banking operation. This studysuggests that the duty of care for both banks should be reformed to improvebank consumers’ experience. For Islamic banks, an improved standard is usefulin performing their duties based on Islamic values. (shrink)

We examine the relationships among religious governance, especially Islamic governance quality (IGQ), national governance quality (NGQ), and risk management and disclosure practices (RDPs), and consequently ascertain whether NGQ has a moderating influence on the IGQ–RDPs nexus. Using one of the largest data sets relating to Islamic banks from 10 Middle East and North Africa (MENA) countries from 2006 to 2013, our findings are threefold. First, we find that RDPs are higher in banks with higher IGQ. Second, we find (...) that RDPs are higher in banks from countries with higher NGQ. Finally, we find that NGQ has a moderating effect on the IGQ–RDPs nexus. Our findings are robust to alternative RDP measures and estimation techniques. These results imply that the quality of disclosure depends on the nature of the macro-social-level factors, such as religion that have remained largely unexplored in business and society research, and, therefore, have important implications for policy makers. (shrink)