Governance from Islamic economic perspective: A Shari’ah governance framework

Uddin, Md Akther (2015): Governance from Islamic economic perspective: A Shari’ah governance framework.

Abstract

This paper attempts to give a brief overview of existing Shari’ah Governance framework in Malaysia, compare with AAOIFI and IFSB standards and guidelines, identify current issues, and recommend measures to improve existing practices. The study finds that a great number of research have been carried out to study Shari’ah Governance framework in Malaysia, Indonesia, GCC, MENA, UK, and other OIC member countries. It can be concluded that the plurality in Shari’ah Governance practice across regions and countries may ensure success and support innovation in the short run, but, in order to establish credibility and promote Islamic Finance as a comprehensive financial system in the long run uniformity is desirable. A sustainable and viable Shari’ah Governance framework, which will not only provide credibility to IFIs but also ensure transparency, trust, ethical behavior, underlying faith and belief and ethics and also help protecting the stakeholders right and fulfill the broader principle of Maqasid al-Shari’ah (foundational goals of the Shari’ah).

• Item Type: MPRA Paper
• Language: English
• Keywords: Governance, Shari’ah Governance, Corporate Governance, Islamic Banks
• Subjects: A - General Economics and Teaching > A1 - General Economics; P - Economic Systems > P0 - General

References

AAOIFI. (2005). Governance Standards for IFIs, No 1-5. Bahrain AAOIFI

Abu-Tapanjeh, A. M. (2009). Corporate governance from the Islamic perspective: A comparative analysis with OECD principles. Critical Perspectives on accounting, 20(5), 556-567.

Bank Negara Malaysia. (2010). Shari'ah Governance Framework for Islamic Financial Institutions. Kuala Lumpur. Bank Negara Malaysia

Dusiki, A. W. (2011). Ethical and Social Responsibility Models for Islamic Finance. Kuala Lumpur: ISRA.

Ghayad, R.(2008). Corporate governance and the global performance of Islamic banks. Humanomics, 24(3), 207 – 216.

Ginena, K. (2014). Shari’ah risk and corporate governance of Islamic banks. Corporate Governance, 14(1) 86 – 103.

Grais, W., & Pellegrini, M. (2006). Corporate Governance and Stakeholders’ Financial Interest in institutions Offering Islamic Financial Services. Word Bank Policy Research Working Paper 4053.

Grassa , R. (2013). Shari’ah supervisory system in Islamic financial institutions: New issues and challenges: a comparative analysis between Southeast Asia models and GCC models. Humanomics, 29(4), 333 – 348.

Haqqi, A. R. A. (2014). Shari’ah Governance in Islamic Financial Institution: An Appraisal. US-China L. Rev., 11, 112.

Hasan, Z. (2008). Stakeholders Model of Governance in Islamic Economic System. Islamic Economic Studies. Paper presented for Finance, Business and Economic Discussion Group of School of Government and International Affairs, Durham University, UK.

Hasan, Z. (2010). Regulatory framework of Shari’ah governance system in Malaysia, GCC Countries and the UK. Kyoto Bulletin of Islamic Area Studies, 3(2), 82-115.

Hasan, Z. (2011). A survey on Shari'ah governance practices in Malaysia, GCC countries and the UK. International Journal of Islamic and Middle Eastern Finance and Management, 4 (1), 30 – 51.

Hasan, Z. (2014). In search of the perceptions of the Shari'ah scholars on Shari'ah governance system. International Journal of Islamic and Middle Eastern Finance and Management, 7(1), 22-36.

Hassan, R., Arifin, M., Othman, A.A., Mohd Napiah, M.D., Omar, M.N., & Yusoff A. (2014). An Empirical Study of the Effectiveness of the Shari’ah Governance Framework (SGF 2010). ISRA Research Paper No.68. 1-79.

IFSB. (2009). Guiding Principles on Shari'ah Governance System in Institutions Offering Islamic Financial Services. Kuala Lumpur: IFSB.

Iqbal, Z, and Mirakhor, A. (2004). Stakeholders Model of Governance in Islamic Economic System. Islamic Economic Studies. IRTI: Islamic Development Bank, 11(2), 43-64.

Kasim, N., Ibrahim, M., Hameed, S., & Sulaiman, M. (2009). Shari’ah auditing in Islamic financial institutions: exploring the gap between the" desirable" and the" actual". Global Economy & finance journal, 2(2), 127-137.

Lazonick, W. (2014). Profits Without Prosperity. Harvard Business Review.

Magalhães, R. & Al-Saad, S. (2013). Corporate governance in Islamic financial institutions: the issues surrounding unrestricted investment account holders. Corporate Governance: The international journal of business in society, 13(1), 39 – 57.

Muneeza, A., & Hassan, R. (2014). Shari'ah corporate governance: the need for a special governance code. Corporate Governance, 14(1), 120 – 129.

Muneeza, A., & Hassan, R. (2011). Legal obstacles in Shari’ah corporate governance of Islamic financial institutions in Malaysia. The Journal of King Abdulaziz University (JKAU): Islamic Economics, 24(2), 207-210.

Nathan, S. & Ribiere, V. (2007). From Knowledge To Wisdom: The Case Of Corporate Governance In Islamic Banking. The Journal of Information and Knowledge Management Systems, 37(4), 471 483.

Omar, M.N., Hassan, R., Arifin, M., Mohd Napiah, M.D., Othman, A.Z., Abdullah, M.A., & Yusoff, A. (2014). The Implementation of Shari’ah Governance Framework of 2010: Advantages and Constraints. Aust. J. Basic & Appl. Sci., 8(13): 684-687.

Organisation for Economic Co-operation and Development. (1999). OECD principles of corporate governance. OECD. Paris.

Shamsher, M., Sori, Z.M., & Shah, E. (2015). Shari’ah Governance: Effectiveness of Shari’ah Committees in Islamic Banks in Malaysia. INCEIF, Kuala Lumpur.

Travers, T. J. (2010). Shari’ah Governance Systems: International Comparative Study of IFIs. Cass Business School.

Wilson, R. (2009). Shari’ah Governance for Islamic Financial Institutions. ISRA International Journal of Islamic Finance, 1(1), 59-75.

Wilson, R. (2012). Legal, regulatory and governance issues in Islamic Finance. Edinburgh: Edinburgh University Press Ltd.