Islamic Banking and Finance in the European Union

Khan, Mohd Saeed; Porzio, Mario

doi:10.4337/9781849803410

Cited by 26 publications

(11 citation statements)

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“…This indicates that increased board membership enhances CSR disclosure, consistent with the studies of Singh et al (2004), Cheng and Courtenay (2006), Abdel-Fattah et al (2007) and Laksamana (2008). The benefit of having a larger board is that it can increase company's value, because they provide a firm with members from different fields of expertise (Khan 2010). Islamic banks with a higher board size do engage to a greater extent in CSR disclosure practices and CSR activities.…”

Section: Empirical Analysis For Determinants Of Csr Disclosurementioning

confidence: 99%

CSR Disclosure, Corporate Governance and Firm Value: a study on GCC Islamic Banks

Harun

Hussainey

Kharuddin

et al. 2020

IJAIM

129

100

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Purpose This study aims to explore the corporate social responsibility disclosure (CSRD) practices of the Islamic banks in the Gulf Cooperation Council (GCC) countries during the period 2010-2014 and examines the determinants of CSRD and its effects on firm value. Design/methodology/approach Based on the Accounting and Auditing Organization for Islamic Financial Institutions Governance Standard No. 7 guidelines and using content analysis, the paper develops a comprehensive CSRD index for GCC Islamic banks. The study applies ordinary least squares regression analysis for hypothesis testing and for finding determinants of respective dependent variables. Findings The results show a very low level of CSRD among the sample Islamic banks in GCC countries. When using corporate governance characteristics to examine the determinants of CSRD, this study provides evidence of a significant positive association between board size and CSRD practice in Islamic banks and a significant negative relationship of chief executive officer (CEO) duality with CSRD, as per expectation. For the economic consequences of CSRD, the study documents an inverse performance effect of CSRD while board size, board composition and CEO duality indicate significant positive effects on firm value. Research limitations/implications The relatively small sample size of GCC Islamic banks may limit the application of the findings to other Islamic financial institutions such as Takaful and the Islamic unit trust company. Practical implications The findings of this study initiate the global debate on the need for corporate governance reform in Islamic banks by providing insights on the role played by corporate governance mechanisms in encouraging and enhancing CSRD practices among Islamic banks. The findings also have important implications for investors, managers, regulatory bodies, policymakers and Islamic banks in the GCC countries. Social implications The results of the study do not support the idea that Islamic banks operating on Islamic principles can meet their social responsibilities through promoting corporate social responsibility (CSR) activities and by differentiating themselves from non-Islamic banks. Originality/value This is the first study to examine the determinants of CSRD in GCC Islamic banks using comprehensive CSRD and corporate governance variables and, therefore, adds value to the existing CSR literature in banking.

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Section: Empirical Analysis For Determinants Of Csr Disclosurementioning

confidence: 99%

CSR Disclosure, Corporate Governance and Firm Value: a study on GCC Islamic Banks

Harun

Hussainey

Kharuddin

et al. 2020

IJAIM

129

100

View full text Add to dashboard Cite

show abstract

“…The average real GDP growth in the MENA region has been about 4 percent, with the highest growth rate of 11 percent in Qatar and 5.2 percent in Saudi Arabia. Although some argue that rising oil revenues and the real estate boom in some GCC countries may have also helped the industry to grow, pointedly, real non-oil GDP of GCC countries has expanded, on average, by only 3 percent, while the Islamic finance industry has seen double-digit growth in the past 25 See for example, Gelbard et al, (2014) and Khan and Porzio (2010). 10 years.…”

Section: Growth Drivers Of Islamic Financementioning

confidence: 99%

An Overview of Islamic Finance

2015

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Islamic finance has started to grow in international finance across the globe, with some concentration in few countries. Nearly 20 percent annual growth of Islamic finance in recent years seems to point to its resilience and broad appeal, partly owing to principles that govern Islamic financial activities, including equity, participation, and ownership. In theory, Islamic finance is resilient to shocks because of its emphasis on risk sharing, limits on excessive risk taking, and strong link to real activities. Empirical evidence on the stability of Islamic banks, however, is so far mixed. While these banks face similar risks as conventional banks do, they are also exposed to idiosyncratic risks, necessitating a tailoring of current risk management practices. The macroeconomic policy implications of the rapid expansion of Islamic finance are far reaching and need careful considerations.

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“…Ahmed (2010), documented that corporate governance, transparency and discipline in financial markets and lack of consensus and diverse interpretation for same problem by every bank Shariah board are among main challenges for IFSI. Consistently, Khan and Porzio (2010), have identified that contracts in Islamic finance, management of assets, Islamic bank customer care, and competition by conventional sector banking are prominent issues. Sadaqat, Ali, and Farhan (2011), have empirically found that for Pakistani Islamic banks the major challenge is management of liquidity risk.…”

Section: First Decade (2007-2016)mentioning

confidence: 92%

Islamic Finance Service Industry and Contemporary Challenges: A Literature Outlook (1987-2016)

Khan¹,

AfaqHaider²,

Hashmi³

et al. 2017

MBR

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Embryonic Islamic banking industry has documented marvellous growth worldwide since inception; stimulated sound rooted western banking to inculcate and include Shariah driven lucrative products and services as an integral part of corporate segment. Research to date has revealed its unique features and ethos, yet it has to overcome multifarious global impediments. The focus of this study is to encapsulate the enormous challenges Islamic finance service industry has encountered during last three decades. We find the arguments such as complex regulatory and supervisory issues; absence of uniform reporting standards; prudential challenges; misconception among western society pertaining to Islamic banking; scant financial instruments and concurrent money and capital markets; fierce compaction by western banking; lack of consensus among Shariah Scholars; and central governing body that are precarious challenges among others. Therefore, policy makers need to constitute an integrated central regulatory body to congregate speckled Islamic banking practices and to foster the underlying philosophy of Sharia compliance operation along with synchronized and unified standardized worldwide.

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Islamic Banking and Finance in the European Union

Cited by 26 publications

References 0 publications

CSR Disclosure, Corporate Governance and Firm Value: a study on GCC Islamic Banks

CSR Disclosure, Corporate Governance and Firm Value: a study on GCC Islamic Banks

An Overview of Islamic Finance

Islamic Finance Service Industry and Contemporary Challenges: A Literature Outlook (1987-2016)

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