IDEAS home Printed from https://ideas.repec.org/a/eee/quaeco/v74y2019icp97-108.html
   My bibliography  Save this article

Exploring the workings of Shari’ah supervisory board in Islamic finance: A perspective of Shari’ah scholars from GCC

Author

Listed:
  • Al Mannai, Muna
  • Ahmed, Habib

Abstract

Islamic finance continues to gain popularity regionally, internationally and both among the Muslim and non-Muslim countries. The Islamic Financial Institution (IFI) differs from its conventional counterpart in its governance structure. It is imperative for the IFI to maintain Shari’ah compliance in all its dealings. Hence, an essential element in the IFI is its Shari’ah Supervisory Board (SSB) and its Shari’ah Governance system. This paper empirically examines the SSB’s structure, and Shari’ah supervision function directly from the SSB members themselves. Right from their appointment, mandates and responsibiities, how they function, to their views on Shari’ah risk, Shari’ah compliance, and to how Shari’ah review and reporting is performed. The findings reveal issues related to the flow of information, governance of SBB and independence of Shari’ah supervision and Shari’ah review as some of the key issues that would need to be addressed/strengthened to enhance confidence, and contribute to the credibility of the of IFI and the Islamic finance market. The opinions expressed are towards having some regulatory involvement that would contribute to the enhancement of supervision.

Suggested Citation

  • Al Mannai, Muna & Ahmed, Habib, 2019. "Exploring the workings of Shari’ah supervisory board in Islamic finance: A perspective of Shari’ah scholars from GCC," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 97-108.
    • Handle: RePEc:eee:quaeco:v:74:y:2019:i:c:p:97-108
    DOI: 10.1016/j.qref.2018.05.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062976917303514
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.qref.2018.05.017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Grais, Wafik & Pellegrini, Matteo, 2006. "Corporate governance and Shariah compliance in institutions offering Islamic financial services," Policy Research Working Paper Series 4054, The World Bank.
    2. Khaled Aljifri & Sunil Kumar Khandelwal, 2013. "Financial Contracts In Conventional And Islamic Financial Institutions: An Agency Theory Perspective," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 4(2), pages 79-88.
    3. Samy Nathan Garas & Chris Pierce, 2010. "Shari'asupervision of Islamic financial institutions," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 18(4), pages 386-407, November.
    4. Abu-Tapanjeh, Abdussalam Mahmoud, 2009. "Corporate governance from the Islamic perspective: A comparative analysis with OECD principles," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(5), pages 556-567.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. GholamReza Karami & Tahere Karimiyan & Mohammad Sadegh Ghaznavi, 2016. "Board Size, Non-Executive Board Members and Financial Performance in Non-Usury Banks in Iran," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 6(6), pages 49-58, June.
    2. GholamReza Karami & Tahere Karimiyan & Mohammad Sadegh Ghaznavi, 2016. "Board Size, Non-Executive Board Members and Financial Performance in Non-Usury Banks in Iran," International Journal of Business and Social Research, LAR Center Press, vol. 6(6), pages 49-58, June.
    3. Samy Garas & Abiot Tessema & Kienpin Tee, 2017. "The impact of Islamic Financial Services Board Standard No. 3 on corporate governance of listed firms in Kuwait," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 14(3), pages 251-263, August.
    4. S. B. Adam* & A. M. H. Al-Aidaros & S. B. Ishak, 2018. "The Moderating Effect of Islamic Work Ethics on the Relationship Between Corporate Governance and Performance of Islamic Financial Institutions in Nigeria: A Proposed Framework," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 1041-1048:6.
    5. Cedrix Ngandop Djeutcheu, 2019. "Ownership Structure and Islamic Banks Performance: An Empirical and Multiregional Tests Before, During and after the Last Global Financial Crisis," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 202-218.
    6. Nurfarahin M. Haridan & Ahmad F. S. Hassan & Yusuf Karbhari, 2018. "Governance, religious assurance and Islamic banks: Do Shariah boards effectively serve?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(4), pages 1015-1043, December.
    7. Hayat, Raphie & Kabir Hassan, M., 2017. "Does an Islamic label indicate good corporate governance?," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 159-174.
    8. Shibani, Osama & De Fuentes, Cristina, 2017. "Differences and similaritites between corporate governance principles in Islamic banks and Conventional banks," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1005-1010.
    9. Abdullah, Wan Amalina Wan & Percy, Majella & Stewart, Jenny, 2015. "Determinants of voluntary corporate governance disclosure: Evidence from Islamic banks in the Southeast Asian and the Gulf Cooperation Council regions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(3), pages 262-279.
    10. Uddin, Md Akther, 2015. "Governance from Islamic economic perspective: A Shari’ah governance framework," MPRA Paper 67695, University Library of Munich, Germany, revised 17 Oct 2015.
    11. Adnan Malik & Karim Ullah & Shakir Ullah, 2020. "Knowledge Diffusion Process & Common Islamic Banking Governance Principles: Integrative Perspective (s) of Managers and Shariah Scholars," Papers 2002.04067, arXiv.org.
    12. Imène BERGUIGA & Philippe ADAIR, 2019. "The performance of Islamic banks in the MENA region: Are specific risks a minor attribute?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 49, pages 5-23.
    13. Olson, Dennis & Zoubi, Taisier A., 2008. "Using accounting ratios to distinguish between Islamic and conventional banks in the GCC region," The International Journal of Accounting, Elsevier, vol. 43(1), pages 45-65, March.
    14. Chaudhry Ghafran & Sofia Yasmin, 2020. "Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry," Journal of Business Ethics, Springer, vol. 167(3), pages 513-533, December.
    15. Naiwei Chen & Min-Teh Yu, 2023. "Sharia compliance, national governance, and value of cash in Organization of Islamic Cooperation countries," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    16. Yildirim, Ramazan & Ilhan, Bilal, 2018. "Fıkhi Filtreleme Metodolojisi - Yeni Bir Fıkhi Yaklaşım [Shari’ah Screening Methodology - New Shari’ah Compliant Approach”]," MPRA Paper 90417, University Library of Munich, Germany.
    17. Farouk Djermani & Arfan Shahzad & Adnan Ahmed Sheikh & Jamal Mohammed Esmail Alekam, 2016. "Factors Influencing The Intention To Use E-Government Services In Algeria: An Empirical Study," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    18. Aysan, Ahmet F. & Disli, Mustafa & Duygun, Meryem & Ozturk, Huseyin, 2018. "Religiosity versus rationality: Depositor behavior in Islamic and conventional banks," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 1-19.
    19. Triyanta, Agus & Hassan, Rusni, 2011. "The Process of Shar ah Assurance in the Product Offering: Some Important Notes for Indonesian and Malaysian Islamic Banking Practice," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 18, pages 17-43.
    20. Muhammad Iqmal Hisham Kamaruddin & Mustafa Mohd Hanefah & Zurina Shafii & Supiah Salleh & Nurazalia Zakaria, 2020. "Comparative Analysis on Shariah Governance in Malaysia: SGF 2010, IFSA 2013 and SGPD 2019," Journal of Public Administration and Governance, Macrothink Institute, vol. 10(1), pages 110131-1101, December.

    More about this item

    Keywords

    Shari’ah supervisory board; Shari’ah governance; Shari’ah independence; Islamic financial institutions; Gulf cooperation council (GCC);
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:quaeco:v:74:y:2019:i:c:p:97-108. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620167 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.