Controversies that make Islamic banking controversial: An analysis of issues and challenges

Malik, Muhammad Shaukat; Malik, Ali; Mustafa, Waqas

doi:10.5251/ajsms.2011.2.1.41.46

Cited by 52 publications

(66 citation statements)

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“…Thus, it shows that the skills and knowledge of human capital builds a competitive advantage for Islamic banking system and fail to impact social activities. In accordance with this, researchers (Malik, Malik, & Mustafa, 2011) draw a conclusion that one of the major issues in the Islamic banks is the deficiency of experts or Islamic finance professionals who possess the knowledge of financial transactions and Shariah as well. Skilled and expert human capital is one of the main components of intellectual capital that leads the operations of the bank towards accomplish the goals of Islamic banks in serving the community by fulfilling its social responsibility.…”

Section: Discussion Of Resultsmentioning

confidence: 94%

The Mediating Effect of Financial Performance on the Relationship between Shariah Supervisory Board Effectiveness, Intellectual Capital and Corporate Social Responsibility, of Islamic Banks in Gulf Cooperation Council Countries

Musibah¹,

Alfattani²

2014

ASS

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The objective of this study was to determine the influence of Shariah Supervisory Board Effectiveness (SSBE) and Intellectual Capital (IC) on Corporate Social Responsibility (CSR) among 36 Islamic banks in Gulf Cooperation Council Countries (GCC) over the period of 2007-2011. Additionally, this study was aimed to identify the significance of financial performance (ROA, ROE) as mediator in the relationship between Shariah Supervisory Board Effectiveness (SSBE), Intellectual Capital (IC) and Corporate Social Responsibility (CSR). For the purpose of data analysis and hypotheses testing, several statistical methods such as multiple regression analysis were utilized to understand the variables. The results of this study reported that SSBE, Capital Employee Efficiency (CEE) and Structure Capital Efficiency (SCE) of Islamic banks positively influenced CSR. However, Human Capital Efficiency (HCE) did not influence CSR. The results of hierarchical multiple regression indicate that financial performance (ROA, ROE) was found to be a significant mediating factor for the relationship between SSBE, CEE, and SCE, and CSR in Islamic banks. The relationship between SSBE, IC, financial performance (ROA, ROE) and CSR suggested that it may be beneficial to the management of Islamic banks to increase CSR as discussed. Limitations and recommendations for future research were also highlighted.

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Section: Discussion Of Resultsmentioning

confidence: 94%

The Mediating Effect of Financial Performance on the Relationship between Shariah Supervisory Board Effectiveness, Intellectual Capital and Corporate Social Responsibility, of Islamic Banks in Gulf Cooperation Council Countries

Musibah¹,

Alfattani²

2014

ASS

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“…Contrary to conventional finance, Islamic financial transactions tend to be more complex because of the requirements to comply with shariah law and have increased cost due to higher legal and shariah compliance fees (Malik, Malik & Mustafa, 2011). ElGamal (as cited in Ahmed, 2015) has also questioned the high fees incurred in the involvement of shariah supervisory boards.…”

Section: Risks Associated With Shariah Compliancementioning

confidence: 99%

“…The situation of conflicting opinions between scholars may increase the possibility of legal risks (Ahmed, 2009). Consequently, Ahmed (2009) andMalik, et al (2011) highlight the important of establishing a National Shariah Board to avoid complication in ruling fatwa and disputes among interpretations, and mitigating shariah compliance, reputation, and legal risks at the same time.…”

Section: Risks Associated With Shariah Compliancementioning

confidence: 99%

“…Musharakah is often perceived to be the preferred Islamic mode of financing, because it structured to the principle of profit and loss sharing (Malik, et al, 2011) where the profits and losses are shared between partners on a pre-agreed ratio and to the proportion of the capital invested (Hassan & Lewis, 2007). Involving parties have the right but are not necessarily obligated to participate in the management of the project.…”

Section: Equity-based Financing Instruments (Musharakah and Mudharabah)mentioning

confidence: 99%

“…Islamic financial institutions and shariah compliant financing are required to form Shariah supervisory boards, and advisory committees consisting of one or more Islamic scholars with extensive experience in law, economics, banking systems and financial transactions (Al-Shakfa, 2010;McMillen, 2001 (Ahmed, 2009;Malik, Malik, & Mustafa, 2011). The presence of a neutral body that can oversee the shariah related issues of the shariah compliant financial sector on a national scale would ensure the healthy development of the industry (Ahmed, 2009).…”

Section: Shariah Compliant Financingmentioning

confidence: 99%

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Identifying risk in shariah compliant financing for transport infrastructure projects in Indonesia

Rianto¹

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The Government of Indonesia is seeking an alternative mode of finance to develop its transport infrastructure. Taking into account the large Muslim population in Indonesia, the strong domestic demand for Islamic finance products, and the growing potential of Islamic banking operations, the government has been promoting the use of shariah compliant financing. Shariah compliant financing is in its infant stages, with a variety of financing instruments from debt-based financing (murabahah, istisna, and ijarah), equity-based financing (musharakah and mudharabah), and service-based financing. Financing can also be obtained from issuing and selling sukuk, certificates that represents ownership of a tangible asset or its usufruct, to investors. Shariah compliant financing and conventional financing are distinguished on the principle of financing, asset ownership, and the involvement of shariah board as a technical and administrative body supervising relevant activities comply with shariah.The literature to date has predominantly focused on risks in the Islamic banking industry and its operation. This research aims to identify the sources and types of risk exposure in shariah compliant financing for transport infrastructure projects in Indonesia. This research conducted thirteen semi-structured interviews with key transport stakeholders from the government, Islamic bank, academic, and consultant sectors. The research reveals that in Indonesia, debt-based shariah compliant financing instruments are the most utilised to finance transport infrastructure projects. The research identified that railways, roads, bridges, and seaports are the type of transport infrastructure facilities that are financed using shariah compliant financing instruments. The risks in shariah compliant financing are generally similar to the risks found in conventional projects with the addition of shariah compliance risk. These risks are identified into four categories: market, institutional and regulatory environment, shariah compliance, and project and structuring.The government is recommended to provide higher return of investment and shorter maturity terms in sukuk to attract more investors and stimulate the secondary market to reduce liquidity risk for the investors. This research also proposes that the National Shariah Board should be involved not only in the structuring stage but also in the entire lifespan of financing to ensure the transaction complies with shariah and reduce the exposure to shariah compliance risk.

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Early Correlates of School Readiness Before and During the COVID-19 Pandemic Linking Health and School Data

Copeland,

Porter,

Gorecki

et al. 2024

JAMA Pediatr

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ImportanceMany known correlates of kindergarten readiness are captured in developmental and social screenings in primary care; little is known about how primary care data predicts school readiness.ObjectiveTo identify early Kindergarten Readiness Assessment (KRA) correlates by linking electronic health record (EHR) data with school district KRA data and to examine potential outcomes of the COVID-19 pandemic using KRA scores between 2018 and 2021.Design, Setting, and ParticipantsThis was a retrospective cohort study linking a large primary care practice (PCP) with school assessment data. Linkage used patient name, date of birth, and address. The setting was an urban school district and PCP affiliated with an academic medical center. Students had a KRA score from fall of 2018, 2019, or 2021 (no 2020 KRA due to the COVID-19 pandemic) and at least 1 prior well-child visit at the PCP.ExposuresExposures included year KRA administered, reported child race and ethnicity, child sex, interpreter for medical visits, child ever failed Ages &amp; Stages Questionnaire (ASQ) 18 to 54 months, ever rarely read to, Medicaid status, food insecurity, housing insecurity, problems with benefits, and caregiver depressive symptoms.Main Outcomes and MeasuresKRA score (continuous), with a possible range of 0 to 300 (passing score = 270).ResultsA total of 3204 PCP patients (mean [SD] age, 67 [4] months; 1612 male [50.3%]; 2642 Black [82.5%]; 94 Hispanic [2.9%]; 244 White [7.6%]) were matched to their KRA score. Mean (SD) KRA scores were significantly lower in 2021 (mean [SD], 260.0 [13.0]; 214 of 998 [21.4%]) compared with 2019 (mean [SD], 262.7 [13.5]; 317 of 1114 [28.5%]) and 2018 (mean [SD], 263.5 [13.6]; 351 of 1092 [32.1%]), a pattern mirrored in the larger school district. In the linear regression final model (n = 2883), the following binary variables significantly lowered the child’s KRA score (points lowered [95% CI]) below a mean passing score of 270.8: child ever failed ASQ after 18 months (−6.7; 95% CI, −7.7 to −5.6), Medicaid insured (−5.7; 95% CI, −9.0 to −2.3), Hispanic ethnicity (−3.8; 95% CI, −6.9 to −0.6), requires interpreter (−3.6; 95% CI, −7.1 to −0.1), 2021 year (−3.5; 95% CI, −4.7 to −2.3), male sex (−2.7; 95% CI, −3.7 to −1.8), ever rarely read to (−1.5; 95% CI, −2.6 to −0.4), and food insecurity (−1.2; 95% CI, −2.4 to −0.1). Race, caregiver depression, housing insecurity, and problems receiving benefits were not associated with KRA scores in final model.Conclusions and RelevanceFindings of this cohort study suggest a deleterious association of the COVID-19 pandemic with early learning and development. There may be potential for PCPs and school districts to collaborate to identify and mitigate risks much earlier.

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Controversies that make Islamic banking controversial: An analysis of issues and challenges

Cited by 52 publications

References 5 publications

The Mediating Effect of Financial Performance on the Relationship between Shariah Supervisory Board Effectiveness, Intellectual Capital and Corporate Social Responsibility, of Islamic Banks in Gulf Cooperation Council Countries

The Mediating Effect of Financial Performance on the Relationship between Shariah Supervisory Board Effectiveness, Intellectual Capital and Corporate Social Responsibility, of Islamic Banks in Gulf Cooperation Council Countries

Identifying risk in shariah compliant financing for transport infrastructure projects in Indonesia

Early Correlates of School Readiness Before and During the COVID-19 Pandemic Linking Health and School Data

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