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Title: Toward An Integrated Shariah Governance Disclosure Framework for Islamic Banks
Authors: Ismail, Muhammad
Keywords: .
Customer Perception, Islamic Banking, Sharīʿah Disclosure, Sharīʿah Governance
Issue Date: 2022
Publisher: Institute of Management Sciences, Peshawar
Abstract: Disclosure is one of the fundamental principles in Sharīʿah governance of Islamic Banking Institutions (IBIs). Therefore, the financial investors, depositors, customers, and general public strongly consider the Sharīʿah related disclosure and transparency of the IBIs as one of the most important factors. In the existing Islamic corporate governance and Sharīʿah governance related literature, little information is available regarding the elements of Sharīʿah governance disclosure in IBIs. Therefore, the study is an attempt to fill this gap by developing a well-content integrated Sharīʿah governance disclosure index for IBIs. The purpose of the research is to explore the crucial Sharīʿah elements that need to be disclosed by IBIs, and which shape the decisions and perceptions of customers and general public toward Islamic banks. In this study, the nature of the inquiry is a mixed method in which open ended interviews used on the qualitative side while index method used on the quantitative side. The current research triangulates the established literature and documents on Sharīʿah governance disclosure with the opinion interviews of the Islamic banks’ Sharīʿah advisors, Sharīʿah compliance officers, Sharīʿah audit and review officers, ex-Sharīʿah advisors, and academicians in Islamic banking and finance in Pakistan. It draws mandatory, standard, and voluntary attributes and puts them in a weighted Index following ordinal scoring and formulates an index from them for measuring Sharīʿah governance performance of Islamic Financial Institutions. Apart from the existing IBI’s elements of Sharīʿah reporting and disclosure in the available literature, the study finds that, IBIs also need to disclose further such as their investment areas and respective proof of Islamicity, elements that leads the contract void when executed between Islamic bank and its client, Sharīʿah appraisal of the adopted products and services, disclosure of the bank’s contribution toward the Maqasid al-Sharīʿah through their activities, and profit distribution system to the pertinent customers and general public at all. In addition to these disclosure, Islamic banks needs to adapt their Sharīʿah disclosure by considering the local school of Sharīʿah interpretation and simple local language. Normally, Islamic banks publish their Sharīʿah reports once a year and fewer stakeholders have access into it. It is recommended to voluntarily publish a monthly Sharīʿah booklet in large numbers. Similarly, Islamic banks, to promote good governance and transparency, may also disclose their Sharīʿah compliance position through different awareness sessions for general public, seminars at different institutions, and academia’s conferences.
Gov't Doc #: 27560
Appears in Collections:PhD Thesis of All Public / Private Sector Universities / DAIs.

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