Composition and Working of the Sharia Supervisory Boards in Bahrain’s Islamic Banks

Kasi, Bhartesh Ramprakash; Mahmood, Najdat

doi:10.20448/journal.502.2019.62.76.81

Cited by 3 publications

(3 citation statements)

References 17 publications

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“…Some scholars argue that this concentration may encourage standardisation of practices and fatwas and may promote the transfer of knowledge and experience among IBs ISRA and Thomson Reuters (2016), while some others point out the adverse effects of Shariah scholar concentration in the form of poor performance, and conflict of interest, claiming that the independence of the scholars will be questionable in such circumstances (Hassan and Lewis, 2007). These conflicting views create core criticism against Islamic corporate governance (Kasi and Mahmood, 2019). In fact, this issue came into the spotlight 10 years ago with the remarkable study of Funds @ Work (2010).…”

Section: Discussionmentioning

confidence: 99%

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

Kachkar

Yılmaz

2022

IJOES

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Purpose This study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing composition of SSBs and the regulatory frameworks and standards of selected Organisation of Islamic Cooperation countries. Diversity characteristics include education, nationality, gender and age. Design/methodology/approach A list of all full-fledged Islamic commercial banks (FFICBs) globally has been carefully prepared and confirmed. Conventional banks with Islamic windows, non-commercial banks, takaful companies and other Islamic financial institutions are excluded. The available profiles of 428 SSB members have been scrutinised and analysed. These board members occupy 522 SSB positions in 238 FFICBs operating in 52 countries around the globe. From the regulatory perspective, 12 national and international Shariah governance frameworks and standards have been examined. Findings Findings of this paper indicate various levels of diversity in SSBs of the reviewed IBs. The level of diversity in educational background and in the nationality of SSBs can be described as generally acceptable. However, a lack of diversity in gender and age among SSB members is evidently observed in IBs. While the lack of age diversity in SSBs may be relatively justified as a common trend in the composition of corporate boards, SSBs of IBs are seriously lagging behind in gender diversity. On the regulatory level, this study concluded that provisions on diversity as a requirement in SSBs are almost non-existent in the existing regulatory frameworks and standards. Research limitations/implications The major limitation of this study is the lack of available information on the SSB members. Practical implications This paper provides insights for IBs and policymakers concerned with the corporate governance of IBs and all Islamic financial institutions. First, it offers an excellent bird’s-eye view of the status of diversity in SSBs of IBs. Second, it motivates policymakers and standard-setting bodies to ensure, through the relevant regulatory frameworks, adequate levels of diversity in the composition of SSBs. Diversity in SSBs of IBs and Islamic financial institutions should be given special emphasis, not only in boards and top management positions but also in the workplace. This is of profound significance to the reputation of Islamic finance industry which has been recently under mounting pressure to translate the rhetoric about the Islamic finance industry being ethical, fair, just, equitable and inclusive into genuine implementations. Originality/value To the best of the authors’ knowledge, this study is the first of its kind to examine the diversity of SSB members from the regulatory as well as from the implementation perspective.

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Section: Discussionmentioning

confidence: 99%

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

Kachkar

Yılmaz

2022

IJOES

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“…The global financial industry grew from USD 0.639 trillion in 2007 to USD 2.2 trillion at the end of 2016 and reached USD 3 trillion in 2020. The Gulf Cooperation Council (GCC) countries, Iran and Malaysia, have become the growth centers of the global Islamic finance industry, including 83% of the market size (Kasi & Mahmood, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…For instance, Bello Dogarawa (2013) explored the role of hisbah on the economy, Baehaqi & Suyanto (2019) examined hisbah in commercial entities and internal audits for government agencies, and Sari & A. Birton (2019) investigated it in the Indonesian case. Third, the study on sharia audit from the perspective of SSB has been very well developed, like Faozan (2013), Injas et al (2016), Mohd Ali et al (2018), Kasi andMahmood (2019), andBaklouti (2020). The Disclosure of Internal Audit Function of Islamic Banks in Indonesia Journal of Accounting and Investment, 2022 | 239 Fourth, external audits for Islamic entities have a broad spectrum, as Suryanto (2016) researched the audit opinion of Islamic entities with a sample in Sumatra, Indonesia.…”

Section: Introductionmentioning

confidence: 99%

Disclosure of Internal Audit Functions of Islamic Banks in Indonesia

Birton

Ermawati

Ektinahati

et al. 2022

JAI

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Research aims: In the massive emerging development of the Islamic financial industry, the role of the internal audit function is in the spotlight as governance is the main issue of this industry’s sustainability. This study, therefore, aims to reveal the role of the internal audit function of Islamic banks in Indonesia.Design/Methodology/Approach: The study employed secondary data from annual and Good Corporate Governance (GCG) reports from Islamic banks in Indonesia to be analyzed with the qualitative content analysis by Schreier.Research findings: The researchers highlighted that the GCG and annual reports could uncover the role of internal audits in Islamic banks. The scope of an internal audit is divided into three essential activities: preparation of work program plans, implementation, monitoring, and follow-up on findings. In comparison, the authority is to communicate with the board of directors, board of commissioners, and audit committee, including the Sharia Supervisory Board (SSB), regarding sharia compliance.Theoretical contribution/Originality: Sharia compliance ensures the soundness and credibility of the Islamic ﬁnance industry. This study identified the role of the internal audit functions of Islamic banks using qualitative content analysis for the first time. Therefore, this study is unique in how the disclosure of internal audit function is presented.Research limitation/Implication: This study was limited in a deeper understanding of the findings as it was based on secondary data analysis. However, the researchers provide vital insights on control conduct of the role played by internal auditors of Islamic banks to satisfy every qualification needed as the role played by internal auditors is vital to pursue GCG principles.

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The Influence of Shariah Supervisory Board on the Financial Stability of Islamic Banks

Khalil

Chihi

Abdelli

et al. 2023

Examining the Vital Financial Role of SMEs in Achieving the Sustainable Development Goals

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The chapter studies the impact of the shariah board's characteristics on the financial stability of Islamic banks. Regression analysis is used to investigate the effect of the shariah board's characteristics on the financial stability of Islamic banks, employing a panel data set of 60 Islamic banking from 2015 to 2018. The findings show that a skilled shariah scholar and a female member have a negative effect on the financial stability of Islamic banks. However, the interlocked shariah scholars and foreigners positively influence the financial stability of banks. Plus, the results indicate that the religious leader (Mufti) and shariah board's size have no significant influence on the financial stability of Islamic banking. This study enhances the literature analysis on corporate governance frameworks and their effect on Islamic banking's financial stability.

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Composition and Working of the Sharia Supervisory Boards in Bahrain’s Islamic Banks

Cited by 3 publications

References 17 publications

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

Disclosure of Internal Audit Functions of Islamic Banks in Indonesia

The Influence of Shariah Supervisory Board on the Financial Stability of Islamic Banks

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