The role of knowledge diffusion in evolving governance principles for Islamic banking

Malik, Adnan; Ullah, Karim; Jan, Shafiullah; Atiq, Muhammad; Abdullah, Ali

doi:10.1108/imefm-07-2020-0325

Cited by 5 publications

(5 citation statements)

References 56 publications

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“…The centricity of Shariah capabilities and the resulting value propositions are important because Islamic banks compete with conventional banks and also among themselves on the notion of being more Islamic. They, therefore, tend to develop Shariah capabilities as the bankers engage deeply with Shariah scholars and end up having significant Shariah-related capabilities and value propositions through the diffusion of Shariah knowledge (Malik et al, 2021). These new capabilities help the Islamic banks overcome various regulatory, demand and other constraints (Nouman et al, 2018) and thus enable unique value propositions.…”

Section: Discussionmentioning

confidence: 99%

“…There are some initial efforts towards the development of such capabilities to adopt and structure participatory and sale-based contracts to avoid Riba (usury) in accepting deposits and offering financing. In conventional banking, deposits are treated as loans, while in Islamic banking, deposits are accepted on the basis of Mudarabah and Qard (Malik et al , 2021). Islamic banks are to develop capabilities for structuring these new forms of contracts and to express these sufficiently in their service experiences to offer Riba -free value (RFV) propositions (Ullah et al , 2017).…”

Section: Introductionmentioning

confidence: 99%

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Shariah capabilities and value propositions of Islamic banking

Ullah

Ashfaque

Atiq

et al. 2023

IMEFM

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Purpose The purpose of this paper is to explore the types of Shariah capabilities of Islamic banks, which provide bases for the types of Shariah value propositions, offered by the relationship managers in their front-line service experiences with the customers. Design/methodology/approach A resource-based view of Shariah capabilities and a service-dominant logic view of value propositions are adopted. Fifteen relationship managers from multiple Islamic banks in Pakistan are interviewed to find a typology of Shariah capabilities and a resultant typology of value propositions for Islamic banks. Findings The findings suggest that Islamic banks claim to possess five types of Shariah capabilities, namely, Shariah governance capability (SGC), Shariah compliance capability (SCC), Shariah monitoring capability (SMC), Shariah structuring (product) capability (SSC) and Shariah learning capability (SLC). These capabilities lead to four types of values propositions, namely, Shariah identity value (SIV), Riba-free value (RFV), Shariah disclosure value (SDV) and Tangibility value (TV) of the real assets in transactions. Research limitations/implications The study has relied on the front-line experiences of relationship managers who are connected to the Islamic banks’ capabilities inside the banks and the value propositions that they offer to show relationships with customers in front-line service experiences. Other stakeholders may have different perspectives on both capabilities and value propositions. Originality/value This paper contributes to Islamic finance theory by theoretically and empirically showing two typologies for the Islamic banks' capabilities and value propositions, respectively.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Shariah capabilities and value propositions of Islamic banking

Ullah

Ashfaque

Atiq

et al. 2023

IMEFM

Self Cite

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“…The Islamic banking system has undergone significant changes since its inception in order to address limitations and ensure its sustainability through adaptation and learning process (Ullah, 2015). Therefore, the current Islamic banking system is the result of ongoing adaptations to the original system by diffusing knowledge and learning (Malik et al, 2021). The flexibility of Islamic banking can be attributed to its transition from a revolutionary framework to an evolutionary one (Nouman and Ullah, 2023).…”

Section: Literature Reviewmentioning

confidence: 99%

“…As most of the literature on adaptation and learning in Islamic finance is discursive and requires new empirical exploration to develop new mechanisms and frameworks for incorporating the adaptation and learning (see Table 1 in the literature review). The adaptation is, however, advocated to be important for the knowledge diffusion and resultant growing collaboration for developing Islamic finance experts and financiers (Malik et al , 2021; Ullah et al , 2023). Exploring adaptation is important in times when Islamic finance markets are growing through new types of instruments and areas of markets (Hassan et al , 2022), requiring persistent adaptation and organizational learning to support the growth.…”

Section: Introductionmentioning

confidence: 99%

Organizational learning and adaptation in participatory Islamic finance

Nouman

Ullah

Jan

et al. 2023

QRFM

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Purpose Islamic banking has undergone significant adaption since its inception. This study aims to investigate why and how Islamic banks adapt their services, using participatory financing as evidence. Design/methodology/approach A qualitative study is designed, using working capital financing and commodity operations financing in Pakistan as analytical units. The data for each analytical unit is analyzed using a qualitative content analysis, while the findings are synthesized using a cross-case synthesis method. Findings Findings suggest that participatory financing has undergone extensive adaptation in the Islamic banking industry of Pakistan, in the wake of resolving constraints to participatory financing and increasing its viability. Consequently, participatory finance has emerged as an attractive and viable option in Pakistan. These findings suggest that unlike in the past, where Islamic banks used to buffer themselves from the environment and ignore the market demands, they have learned to respond effectively to the market demands and the challenges posed by the environment. Research limitations/implications Findings suggest that the adaptation strategy is more effective than the migration strategy, because it enables the financial service systems to reduce the underlying risks by avoiding emergent threats and eradicating the inherent weaknesses. Originality/value The extant literature provides a generalized view on the adaptation process that Islamic banks undergo to comply with their environment. However, it is limited in terms of conceptualizing the adaptations and innovations in their products and the underlying structural variations. The present study fills this gap.

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“…The theory of maq a Á sid al-Sharīʿah plays a major role in determining the legality of Islamic transactions, as it establishes the relationship between human behavior and its impact on public welfare (Bedoui and Mansour, 2014). The knowledge of maq a Á sid al-Sharīʿah pertaining to financial transactions (muʿ amal at m aliyyah) can guide the Sharīʿah boards of Islamic banks and fiqh boards of various international organizations (Malik et al, 2021;Zughaybah, 2001). Hence, maq a Á sid al-Sharīʿah should be at the forefront of developing Islamic finance products (Qoyum, 2018).…”

Section: Introductionmentioning

confidence: 99%

The actualization of maqāṣid al-Sharīʿah in Islamic finance: a conceptual framework

Monawer

Rahman

Al-‎Nahari

et al. 2021

IMEFM

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Purpose This paper aims to formulate a conceptual framework that will facilitate the actualization of maqāṣid al-Sharīʿah in product design and consumption within Islamic financial institutions (IFIs). Design/methodology/approach This paper relies on the classical and contemporary literature on maqāṣid al-Sharīʿah and Islamic finance and adopts a qualitative content analysis method and an inductive approach to outline the constituent elements that formulate the framework. Findings This study determines six vital constituents of maqāṣid al-Sharīʿah, namely, parameters of maqāṣid, particular objectives, appropriate means, micro provisions, level of need and legal maxims to develop a conceptual framework of actualizing maqāṣid al-Sharīʿah in Islamic finance. The framework covers the following three stages: identification of maqāṣid, operationalization of maqāṣid in product design and consumption based on maqāṣid. Research limitations/implications This paper proposes a conceptual framework without investigating the practice of any particular industry or products. Further research would focus on formulating a practical framework based on a focus group discussion with industry experts, elaborating the parameters of maqāṣid, scrutinizing the maqāṣid available in the literature by the parameters of maqāṣid and assessing the IFIs’ products and services using the proposed framework. Practical implications This paper provides insights into the importance of maqāṣid elements and the effects of overlooking them on IFIs and customers’ product consumption. Furthermore, a major implication of the proposed framework is to learn how to use the maqāṣid approach as the baseline for designing new financial products. Originality/value The novelty of this paper lies in its pioneering attempt of harmonizing all essential maqāṣid elements and using them as constituents to formulate a comprehensive framework that actualizes maqāṣid al-Sharīʿah in the Islamic finance industry.

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The role of knowledge diffusion in evolving governance principles for Islamic banking

Cited by 5 publications

References 56 publications

Shariah capabilities and value propositions of Islamic banking

Shariah capabilities and value propositions of Islamic banking

Organizational learning and adaptation in participatory Islamic finance

The actualization of maqāṣid al-Sharīʿah in Islamic finance: a conceptual framework

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