The control of the Shari'a Supervisory Board in the Islamic financial institutions
Purpose – The Islamic financial institutions (IFIs) maintain better control over their transactions than conventional financial institutions (CFIs) through the existence of Shari'a Supervisory Board (SSB) and Shari'a Control Department (SCD). The purpose of this paper is to highlight the superiority of Shari'a supervision over external audit and Shari'a audit over internal audit. The study identifies five independent variables that affect the SSB control: ex-ante Shari'a audit; ex-post Shari'a audit; SCD reporting to the SSB; corrective actions of SSB towards the management violations; and the number of SSB members. Design/methodology/approach – The variables are articulated in five hypotheses, which are tested by ordinary least square regression. The data are collected via a questionnaire which was sent to the SSB members of 219 IFIs in the Gulf Cooperation Council (GCC) countries. Findings – The results indicate that ex-ante Shari'a audit, ex-post Shari'a audit, and reporting of SCD are significantly related to the SSB control, whereas corrective actions and the number of SSB members have insignificant relation. Research limitations/implications – The research is focused on internal factors only, without considering other external factors such as stakeholders and regulators. Also, the research covered the GCC region alone. Practical implications – The research recommends testing the hypotheses in other geographies to generalize the results, and including external factors as well as shareholders and board of directors. Social implications – The research provides practical implications for the SCD role and calls for merging the SCD with the traditional internal audit department to reduce the excessive work of controlling. Originality/value – The paper contributes to the literature gap about the SSB. It is believed to be one of few studies that provide empirical evidence about the SSB control in the IFIs of the GCC region.
Volume (Year): 5 (2012)
Issue (Month): 1 (April)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://emeraldgrouppublishing.com/products/journals/journals.htm?id=imefm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ana Fernández-Laviada, 2007. "Internal audit function role in operational risk management," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 15(2), pages 143-155, May.
When requesting a correction, please mention this item's handle: RePEc:eme:imefpp:v:5:y:2012:i:1:p:8-24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister)
If references are entirely missing, you can add them using this form.