Shariah Governance Framework of Islamic Banks in Bangladesh: Practices, Problems and Recommendations

Alam, Md. Kausar; Rahman, Suhaimi Ab; Mustafa, Hasri; Shah, Sabarina Mohammed; Hossain, Md. Shamim

doi:10.18488/journal.aefr.2019.91.118.132

Cited by 48 publications

(67 citation statements)

References 18 publications

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“…The Shariah audit function is implemented at three levels: i) audit of the financial statement, ii) compliance audit on organisational structure, people and process and iii) review on the adequacy of the Shariah governance process. As a result, Alam et al (2019) suggest an efficient conduct of Shariah audit will minimise Shariah noncompliance risks, promoting good Shariah practice in the Islamic banking sector.…”

Section: Shariah Auditmentioning

confidence: 99%

Shariah Governance Practices of Malaysian Islamic Banks in the Light of Shariah Compliance

Masruki

Hanefah

Dhar

2020

AJAG

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Islamic banks in Malaysia must conform to Shariah rules in their operations. Islam's prohibition of usury is the main justification for the necessity of Islamic banks (IBs). Indeed, the implementation of Shariah governance through the Shariah Supervisory Board (SSB) is essential to monitor and govern the operations of IBs for ensuring the integrity, credibility and transparency of IBs. Failure to conform to good Shariah governance practices will result in the IBs' failure to uphold Shariah in their operations. The objective of this paper is to examine the Shariah governance practices of IBs in Malaysia. This study employs content analysis to identify the extent to which the Shariah governance is being practised by IBs. A disclosure checklist was developed based on a review of previous studies and regulations, namely the

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Section: Shariah Auditmentioning

confidence: 99%

Shariah Governance Practices of Malaysian Islamic Banks in the Light of Shariah Compliance

Masruki

Hanefah

Dhar

2020

AJAG

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“…One such way to improve efficiency could be finding more standardized financial instruments (Alam et al, 2019). Without such improvements, the Islamic banks might be facing challenges in near future, especially in collecting deposits, in the rapidly growing and competitive banking industry in Bangladesh.…”

Section: Discussionmentioning

confidence: 99%

Are Islamic Banks Less Efficient than other Banks? Evidence from Bangladesh

Haque

Sohel²

2019

Asian Economic and Financial Review

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Considering the recent shrinkage in Islamic banks' profitability in Bangladesh, this study investigated whether these banks are less efficient than the conventional and mixed banks. Using 250 firm-year observations from 38 private commercial banks for the years from 2011 to 2017 and estimating operational efficiency through the Data Envelopment and Stochastic Frontier Analyses, we found robust evidence that Islamic banks are less efficient than the conventional and mixed banks. In additional analysis, it was found that the lower efficiency of Islamic banks was driven by their noninvestment income. A significant negative shift in Islamic banks' efficiency was evident in the most recent years compared to the earliest periods in our sample window. These findings helped us explain why the relative profitability of Islamic banks has declined recently. We suggest that Islamic banks' management pay more attention to their portfolio of non-investment products and services in order to remain competitive in the fast-growing banking landscape in Bangladesh. Contribution/ Originality: This study contributes to the existing literature on estimating banks' efficiency through the techniques of frontier analysis. While revenue is one of the primary sources of cash inflows, research examining banks' efficiency in generating revenues by utilizing their resources is scarce. We filled this gap in the literature.

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“…Finally, for effective corporate governance practice and monitoring the financial institutions, an arrangement of several aspects alike regulators, observation and advocacy are required to ensure compliance within the institutions and protect the interest of stakeholders. Besides, it is important to have a comprehensive Shariah governance guideline for IFIs to obey and apply in their particular institution and need to be monitored by the BOD, Shariah supervisory board, and regulatory body (Alam et al, 2019b). A strong monitoring movement is important to implement the governance structure so that all corporate participants follow the standards of the governance system.…”

Section: Discussionmentioning

confidence: 99%

An Overview of Corporate Governance Models in Financial Institutions

Alam

Rahman

Mustafa

et al. 2019

International Journal of Management and Sustainability

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The paper illustrates the models of corporate governance in the aspects of its definition, nature of management and objectives along with its roles, regulation and power of various stakeholders in ensuring the accountability and the protection of the rights of various stakeholders from conventional and Islamic perspectives. These models are different in their characteristics, nature, culture, costume, epistemology, and country"s rules and regulation. However, the conventional models highlight the roles of shareholders, stakeholders, depositors, institutions, investors, and communities from the perspective of the nation"s demand and cultures. In contrast, the Islamic model of corporate governance consists of some roles and responsibilities such as the responsibilities to suppliers, customers, investment account holders, shareholders, management, the board of directors, competitors, Shariah supervisory boards, societies, and the employees from its spiritual and social commitments. Through the critical analysis of these models of corporate governance is deemed to help the empirical research on corporate governance model and develop a certain model of Islamic corporate governance. However, the paper may help to give a simple understanding of the corporate governance models in both the conventional and Islamic perspectives of financial institutions. Contribution/Originality:This study illustrates the global corporate governance models in relation to financial institutions. The study is exclusive on the corporate governance models because to be our best of the knowledge none of the paper discusses the seven models of governance systems. The paper can be a source of understanding the corporate governance system for the academicians to get the preliminary picture of globalized models and help to develop and improve the existing systems.

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Shariah Governance Framework of Islamic Banks in Bangladesh: Practices, Problems and Recommendations

Cited by 48 publications

References 18 publications

Shariah Governance Practices of Malaysian Islamic Banks in the Light of Shariah Compliance

Shariah Governance Practices of Malaysian Islamic Banks in the Light of Shariah Compliance

Are Islamic Banks Less Efficient than other Banks? Evidence from Bangladesh

An Overview of Corporate Governance Models in Financial Institutions

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