Corporate governance of Islamic banks: a sustainable model to protect the participatory depositor?

Abstract

The religious principles that characterize the Islamic bank have direct consequences on the models of Corporate Governance which, at the same time, must be in accordance with national and international regulations and best practices. The aim of this paper is to analyze the role of the participatory depositor in the Corporate Governance Models of the Islamic Bank, a special category of stakeholder that entrusts their savings to the Islamic Bank on the basis of the Profit and Loss Sharing principle. In the present study the models of Corporate Governance of the Islamic Bank, with regard to the protection of the interests of the participatory depositor, are analyzed through a comparative analysis of the regulations of the following Countries, Malaysia and Morocco. The objective is to highlight the strengths and weaknesses of the protection of the interests of affected stakeholders in order to verify the presence of a sustainable model of Corporate Governance, namely if the participatory depositor needs more guarantees than other categories of stakeholders.

Islamic Ethics in Business and Finance: Implication for Corporate Governance and Responsibility

“…Islamic Corporate Governance (ICG) and Intellectual Capital (IC) are essential for aligning banking practices with Islamic ethics and achieving the goals of Sharia compliance (Sumartiningrum & Salahuddin, 2022). The governance structure of Islamic banks must navigate between religious principles and regulatory requirements, ensuring compliance with both Islamic values and international standards (Franzoni & Allali, 2023). Stakeholder-oriented models of Islamic corporate governance reflect the emphasis on justice and equality inherent in Islamic teachings (Mahadi et al, 2018).…”

“…Islamic work ethics are highlighted as crucial for corporate sustainability, emphasizing the importance of ethical values in achieving sustainability goals (Asha'ari, 2018). Islamic banks' Corporate Governance models must align with religious principles while complying with national and international regulations and best practices (Franzoni & Allali, 2023). Islamic Corporate Governance structures are stakeholder-oriented, reflecting the importance of considering stakeholders' interests in decision-making processes (Mahadi et al, 2018).…”

“…The application of ICG is similar to conventional GCG, emphasizing the importance of governance structures in upholding ethical standards (Adiwijaya et al, 2023). The governance of Islamic banks is influenced by Sharia principles, such as tawhid and shura, which shape the Corporate Governance models of these institutions (Franzoni & Allali, 2023).…”

Analysis of the Effect F Revenue Share of Mudharabah and Musyarakah Financing Proceeds on Return on Investment (Roi) of an Islamic Bank: A Case Study

“…Aqidah is related to one's faith, and morals are related to ethical and normative deeds. As an economic model grounded in Islamic principles, the Islamic Bank is distinguished by several unique features (Franzoni & Ait Allali, 2023). In their operations, Islamic banks do not implement the concept of interest in money or know the loan of money (Mirawati, 2018;Rahman et al, 2023).…”

“…Profit-sharing is a crucial aspect of Islamic banks. Therefore they operate under Islamic law principles (Franzoni & Ait Allali, 2023). The revenue-sharing idea distinguishes Islamic banks from conventional banks (Bramandita & Harun, 2020).…”