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Shari’a Governance in Bahrain: Analysing the Islamic Banking Industry’s Implementation of the Newly Issued Regulatory Shari’a Governance Module

Author

Listed:
  • Abdulrahman Al-Saadi

    (Department of Islamic Banking, University of Bahrain, Sakhir P.O. Box 32038, Bahrain)

  • M. Kabir Hassan

    (Department of Economics and Finance, University of New Orleans, New Orleans, LA 70148, USA)

  • Ahmed Mansoor Alkhan

    (Department of Islamic Banking, University of Bahrain, Sakhir P.O. Box 32038, Bahrain)

Abstract

Shari’a governance is considered a crucial element of the Islamic banking industry. As recent as 2017, Islamic banks in the Kingdom of Bahrain were required by the regulator to have only a Shari’a Supervisory Board and an internal Shari’a function. In 2017, the Central Bank of Bahrain issued a new Shari’a Governance module (SG) in its rulebook, requiring all Islamic banks to have at least two internal Shari’a departments instead of one, mandated external Shari’a auditing, and maintaining the necessity of having a Shari’a Supervisory Board. In this study, through an empirical enquiry, we analyse how the Islamic banking industry implemented this new module. The empirical results revealed that there seems to be an implementation gap between Islamic retail and wholesale banks, where the former have fully implemented the new Shari’a governance requirements, while the latter were given exemptions to postpone its implementation.

Suggested Citation

  • Abdulrahman Al-Saadi & M. Kabir Hassan & Ahmed Mansoor Alkhan, 2022. "Shari’a Governance in Bahrain: Analysing the Islamic Banking Industry’s Implementation of the Newly Issued Regulatory Shari’a Governance Module," JRFM, MDPI, vol. 15(10), pages 1-22, September.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:10:p:418-:d:920083
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