With the eminence of the era of knowledge-based economies, the concept of intellectual capital (IC) is of vital importance for organisations to survive in these vigorous environments. As one of the knowledge intensive sectors, there is no exception to banking institutions in enhancing their intellectual capital efficiency to the forefront especially for Islamic banks (IBs) that have to compete with the firmlyestablished conventional banks. Accordingly, this study intends to measure the relationship between intellectual capital efficiency and banks’ performance. In total, 59 Islamic banks are selected and their audited annual reports are compiled from the banks’ websites respectively from year 2006-2017. Value-added intellectual coefficient (VAIC) are applied in measuring IC efficiency. The findings provide empirical evidences of positive relationship between IC efficiency and banks performance, nonetheless, when decomposes into human capital efficiency (HCE), structural capital efficiency (SCE) and capital employed efficiency (CEE), only human capital efficiency shows significant positive relationship with performance of the banks while the other two components show significant negative linkage with bank performance. Furthermore, due to criticisms towards VAIC method, this study using modified value-added intellectual capital coefficient (MVAIC) and found that MVAIC has significant positive relationship with bank performance while relational capital as additional variable in MVAIC regression model has no significant effect with bank performance. This study provides better insights on the importance of utilisation of IC by banking institutions particularly for Islamic banks.

Using the sample of 59 Islamic banks during the period of 2006-2017, the purpose of this paper is to examine the impact of corporate governance mechanisms through the characteristics of board of directors that may influence the intellectual capital (IC) efficiency of Islamic banks. The characteristics of board of directors are represented through the size of the board (board size), the proportion of female members on the board (board female), the number of board meetings (board meeting), the proportion of board members who have financing and accounting expertise (board expertise) and the diversity in terms of board members' nationalities (board nationality diversity). Meanwhile, IC efficiency has been measured using value-added intellectual coefficient (VAIC). This study provides empirical evidence showing that board expertise has positively associated with IC efficiency. This study also examines the linkage between corporate governance mechanisms and IC components namely HCE, SCE and CEE and found that board expertise exerts positive significant impact to HCE and SCE while no significant impact to CEE. Additionally, board female has significant positive relationship with SCE. The study is extremely pivotal in order to know the determinants that can contribute to the enhancement of IC efficiency in respect of corporate governance of Islamic banks.

This chapter is about two major components namely Shari'ah audit (SA) and Shari'ah compliance (SC). The chapter evaluates the role and function of Shari'ah audit and Shari'ah committee and observes to what extent the Shari'ah audit helps in reducing Islamic banks' risk exposure. Five banks were chosen to answer the research questions; and five Shari'ah officers from different groups of respondents, who are involved directly in the process of Shari'ah compliance/auditing in Malaysian Islamic Financial Institutions (IFIs), were interviewed. Findings of the in-depth interviews revealed that the Shari'ah Governance Framework (SGF) positively impacts SA. The research shows that the functions of Shari'ah audit are more specific and covers all aspects. It should possess good knowledge, both of Shari'ah and accounting/auditing. The majority of the respondents agreed that Shari'ah non-compliance risk in IFIs is minimal.

This study empirically investigates the relationship between ownership structure, capital, and bank lending for Islamic and conventional banks during the financial crisis of 2008 to 2009. Using 118 banks from 19 countries over the global financial crisis, the study examines whether the relationship varied with the ownership structure and capital quality on bank lending behaviour. The authors found that governmentowned Islamic banks had a higher loan growth rate than conventional banks during the crisis. The increased lending of the government-owned banks was correlated with high-quality capital and more positive GDP and inflation over the duration of the crisis. The evidence supported the notion that the government-owned banks had a significantly positive effect on the lending growth in Islamic banks after the banks retained sufficient capital. High capital quality can help Islamic banks to survive during a financial crisis and to channel credit in the real market. This study contributes to the proof support that the Islamic banking system can be beneficial for financial and economic stability, especially during a financial crisis.

Credit supply in the market is crucial in order to ensure sustainable real production can survive in the market as well as to strengthen economic activity. Therefore, it is not surprising that when the financial crisis occurred in 2008 to 2009, policymakers continued to use a variety of mechanisms such that banks could continue to maintain their credit supply. Nevertheless, risk sharing based on the business model that was adopted by Islamic banks displayed different behaviour from the conventional banks. Based on prior studies, the stability of financing growth by Islamic banks as compared to lending growth of conventional banks showed the model used by Islamic banks was more capable of effectively withstanding the financial crisis. Therefore, research into the quality of lending and financing is important to understand the growth of bank lending and financing behaviour in the market. Hence, the main objective of this study is to review the effect of ownership structure, bank capital and bank lending including financing behaviour in Islamic versus conventional banks. In addition, this study proposes a conceptual framework to further comprehend the decisions made in undertaking ownership structure, bank capital and lending in the dual banking system.