Corporate Social Responsibility and Islamic Financial Institutions (IFIs): Management Perceptions from IFIs in Bahrain

Abstract

Islamic finance is gaining greater attention in the finance industry, and this paper analyses how Islamic Financial Institutions (IFIs) are responding to the welfare needs of society.Using interview data with managers and content analysis of the disclosures, this study attempts to understand management perceptions of Corporate Social Responsibility (CSR) in IFIs. A thorough understanding of CSR by managers, as evident in the interviews, has not been translated fully into practice. The partial use of IFIs' potential role in social welfare would add further challenges in the era of financialisation.

The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector

“…Thus, in this study, in line with the guidance provided by AAOIFI's Standard No. 7 and the previous studies by Haniffa and Hudaib (2007), Aribi and Gao (2012) and Aribi and Arun (2015), who developed CSR categories and their items based on the Islamic financial perspective on CSR, the dimensions and sub-dimensions for the measurement of CSR disclosure for Islamic banks were identified and the CSR disclosure index was constructed.…”

“…The construction of the dimensions and subdimensions of the CSR disclosure index is based on the CSR-related standards developed by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAIOFI 2010). 1 Furthermore, the previous studies on CSR disclosure from an Islamic finance perspective studies are taken as a guide, which includes Haniffa and Hudaib (2007), Aribi and Gao (2012) and Aribi and Arun (2015). As a result, six major dimensions are selected: 'mission and vision statement', 'products and services', 'commitment towards employees', 'commitment towards debtors', 'commitment towards society'; 'zakah (compulsory alms giving by those beyond a threshold level of wealth in the sense of 'returning the right of society to society')'; charity and benevolent funding.…”

Corporate Social Responsibility in Islamic and Conventional View: A Theoretical Approach

“…Islamic ethics has various linkages to sharia banking, such as those relating to the welfare of individuals and communities or CSR [38]. CSR in Islamic banking emphasizes ethical values and social responsibility, and is based on the principles of sharia law [28,39] Sharia law prohibits usury, gharar, destroys the environment and puts more emphasis on moral and ethical behavior [8,25]. Zakat, qard al hasan (loan without interest), waqaf, sadaqa (charity) [26], and employees [2,25,34] forms or activities of CSR in Islamic banking [25].…”

Principles of Islamic Finance and Principles of Corporate Social Responsibility: What Convergence?

“…Recent studies on CSR made by Islamic finance institutions focused their research on customer perception related to CSR [33][34][35] and its principles in terms of practicability, measuring its outcomes [36][37][38][39].…”