Corporate Governance and Stakeholder Rights in Islamic Insurance

Archer, Simon; Karim, Rifaat Ahmed Abdel; Nienhaus, Volker

doi:10.1002/9781118390528.ch4

Cited by 7 publications

(7 citation statements)

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“…Under the UK/Commonwealth-based governance model practiced by takaful operators in Malaysia, empowering the Shariah committee, by entrusting them to represent takaful contributors’ interests in a broader capacity than what they can do currently, will assist the board of directors in exercising their roles. This is particularly important with regard to the board of director’s accountability: to the takaful contributors as well as the shareholders (Archer et al , 2009). Moreover, in term of the investments being managed, the funds contributed are sourced from takaful contributors (Lewis, 2005; Ali et al , 2008), who ultimately face the investment risk (specifically of capital loss) (Ali and Ahmad, 2012; Mohd Kassim, 2012), suggesting that it is these parties that they should be reimbursed well.…”

Section: Resultsmentioning

confidence: 99%

“…Archer et al (2009) argue that takaful contributors, as the main stakeholders, should be given priority over shareholders. To put it differently, they should be seen from the perspective of being the principals’ principals as they are the supposed beneficiaries of the economic services.…”

Section: Discussionmentioning

confidence: 99%

“…To bridge these two models, Davis et al (1997) argue that the principals make a choice, as owners, regarding the risk they are willing to assume when transferring the management of the firm to its executives (managers). In the context of takaful operators, which possess a hybrid structure combining mutual and proprietary insurance (Archer et al , 2009), the decision rests with the shareholders who assume full control of the operations.…”

Section: Takaful Operators: Stewards Of the Takaful Fundsmentioning

confidence: 99%

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Linking governance qualities and stewardship attributes: findings from Malaysian takaful operators

Muhamat

McIver

2019

JIABR

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Purpose As custodians of takaful contributors’ tabarru’ (donation) funds, takaful operators are expected to fulfil a stewardship role propagated under the precepts of Islam. The purpose of this paper is to analyse takaful operators’ stewardship, focusing on investment practices. Design/methodology/approach Structured interviews were conducted with senior investment staff from all of Malaysia’s takaful operators. Questions, developed using Delphi-style techniques, allowed a five-point Likert scale response addressing specific issues revolving around seven dimensions of governance quality – using the Malaysian Rating Corporation’s (MARC’s) governance rating guidelines for Islamic financial institutions (IFIs). Interviewees’ responses were assigned composite scores. Findings Malaysia’s takaful operators score well on most prescribed governance quality dimensions, although performance varies between operators and across dimensions. Areas for improvement are identified, especially regarding disclosure of information and contributor involvement in takaful operators’ management. Research limitations/implications Predetermined questions restrict flexibility in obtaining takaful operators’ information; however, end-of-interview, open-ended questions were asked to tap interviewee opinions on pertinent issues. A focus on takaful operators’ governance quality and stewardship of investments means findings may not be representative of all operational aspects of their businesses. Practical implications This study identifies governance quality guidelines which takaful operators may benchmark against and identifies where best to focus attempts to improve performance. These guidelines will also assist regulators assessing takaful operators’ stewardship performance. Originality/value This study uses governance quality as an indicator of stewardship, a concept aligned with the precepts of Shariah. It covers the opinion of the takaful industry in a country with a comprehensive Islamic financial system, Malaysia, extending understanding of takaful operators’ governance quality.

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Section: Resultsmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Section: Takaful Operators: Stewards Of the Takaful Fundsmentioning

confidence: 99%

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Linking governance qualities and stewardship attributes: findings from Malaysian takaful operators

Muhamat

McIver

2019

JIABR

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“…In fact, Islamic investors are more interested in the services that IBs offer rather than share ownership of the IBs. Although, the IAH do not have any formal voting rights, they influence the level of "vicariously" monitoring of management through shareholders (Archer et al, 2012).…”

Section: Shariah Supervisory Board's Characteristicsmentioning

confidence: 99%

The effect of Islamic banks’ specific corporate governance mechanisms on compliance with AAOIFI governance standards

Mnif

Tahari

2020

JIABR

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Purpose The purpose of this paper is to examine the effect of specific Islamic banks’ (IBs) corporate governance (CG) mechanisms on compliance with the Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) governance standards (GSs) disclosure requirements. Design/methodology/approach Using an unweighted governance compliance index, the authors measure the extent of IBs’ compliance with 7 AAOIFI GSs’ disclosure requirements over the period 2009–2015 (372 bank-year observations). In addition, a multivariate regression analysis was used to test the four hypotheses. Findings This study’s results report substantial non-compliance (the mean of compliance level with AAOIFI’s GSs over the covered years for the entire sampled IBs is 52.1%). The findings reveal that the Shariah Supervisory Board’s (SSB) remuneration, SSB’s members with only industry expertise, SSB’s members with the combined industry expertise and accounting and financial expertise, the existence of internal Shariah Auditing Department and the level of investment accounts holders’ funds are positively associated with the level of compliance with AAOIFI’s GSs. Originality/value The existing studies focusing on the determinants of compliance with AAOIFI’s standards are in the early research stage, as to the best of the authors’ knowledge, there is a paucity of empirical research testing this issue. The authors extend these studies by examining all the AAOIFI’s GSs and focusing on the specific IBs’ CG mechanisms. Furthermore, a major contribution of this study is the examination of the relationship between some SSB’s characteristics and compliance level. To the best of the authors’ knowledge, this is the first research that has examined the effect of the SSB’s remuneration and expertise on compliance level.

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“…In the Islamic finance literature, many of the issues have evolved around business conduct (Chatterjee, 2010) and models (Bakar, 2010), supervision and regulations, legality (Hussain, 2010) and corporate governance (Archer et al, 2010). These issues are further analysed.…”

Section: ) Literature Reviewmentioning

confidence: 99%

Takaful in Nigeria : Penetration Challenges and Way Forward

Yusuf¹

2015

JIEBF

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Takaful's birth in Nigeria is a decade old. Observers of the Nigerian insurance market had expected a more rapid increase and growth of the sector's contribution to the GDP. However, in Nigeria takaful is considered as a new phenomenon with its absence in insurance legislation and near zero appearance of takaful companies even with a Muslim majority population in the country. By the last count, only three conventional insurance companies have fully began operations of Takaful with other unconfirmed information of other willing entrants into the sector. Can we say that the actual score card of Takaful has met the expectations of its protagonists? This paper seeks to assess the level of performance of Takaful companies in the Nigerian insurance market, analyze the challenges facing these companies and make recommendations for policy and practice as ways forward. To actualize these objectives, the paper adopts a case study approach of the existing three Takaful insurance companies currently operating in Nigeria. It uses an interview method to explore the experiences of these companies and the lessons that can be learnt to jump-start Takaful's contribution to the economy. These findings relate to investors' motivation, capitalization, manpower, investment channels and challenges facing the new experience. Recommendations for policy and practice are proffered to chart a new way forward.

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Corporate Governance and Stakeholder Rights in Islamic Insurance

Cited by 7 publications

References 0 publications

Linking governance qualities and stewardship attributes: findings from Malaysian takaful operators

Linking governance qualities and stewardship attributes: findings from Malaysian takaful operators

The effect of Islamic banks’ specific corporate governance mechanisms on compliance with AAOIFI governance standards

Takaful in Nigeria : Penetration Challenges and Way Forward

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