A systematic literature review on the role of sharia governance in improving financial performance in sharia banking

Abstract

Purpose The purpose of this paper is to systematically review the study of the relationship between sharia governance (SG), which is represented by the Sharia Supervisory Board (SSB), and internal sharia compliance, and whether it can affect the performance of Islamic banking. Design/methodology/approach Literature search consists of two steps: random literature review and systematic literature review. The methodology adopted in this article is a systematic literature review. Findings The variable of internal sharia compliance, sharia risk and internal sharia audit on one of the indications of SG newly researched variable which will later be used as a new paradigm, to measure the implementation of Islamic sharia principles in sharia banking. Practical implications The development of a conceptual framework by using measurement of the new SG has practical implications for sharia bank, which can later be applied to also increase sharia banking performance by complying with Islamic sharia principles. This new concept can be used as a reference by the Financial Service Authority (Otoritas Jasa Keuangan) to establish regulations regarding SG framework, especially in Indonesia. Originality/value Further research can add more of it or replace it with other variables that are more relevant, in such a way that it could be empirically tested on how the independence and remuneration (lit. performance allowance) of SSB and the internal sharia control team can affect the performance of sharia banks.

A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention

“…Specifically, Ibrahim and Mohd Sapian (2022) highlighted research on the influence of customer preferences on house financing decisions and their enthusiasm for Islamic banking products. Minaryanti and Mihajat (2023) conducted a detailed research analysis on the relationship between Sharia governance from the Sharia Supervisory Board and internal Sharia compliance, as well as its effect on the performance of Islamic banks. In a systematic literature study, previous researchers have not discussed the Sharia compliance behaviour of bank customers.…”

Zillennial Perceptions of Sharia Governance Implementation and Its Implications on the Reputation, Trust, and Loyalty of Islamic Banks

“…Sharia governance, represented by the Sharia Supervisory Board (DPS), ensures Islamic banking operations and transactions comply with Islamic principles sourced from the Qur'an and Hadith (Abubakar & Handayani, 2021). DPS oversees Sharia internal compliance, risk, and internal audit to ensure the implementation of Islamic Sharia principles in Islamic banking (Minaryanti & Mihajat, 2023). Shariah governance practices in Islamic banking emphasize independence, accountability, and transparency, which are important to ensure good governance and compliance with Shariah principles (Ahmed & Mohamad, 2019).…”