Exploring corporate social responsibility disclosure: the case of Islamic banks

Abstract

PurposeThe purpose of this paper is to explore whether any discrepancy exists between the corporate social activities disclosed in the annual reports of Islamic banks and the corporate social responsibility (CSR) disclosure index which has been developed based on the Islamic business ethics framework.Design/methodology/approachThis paper reports on a survey of annual reports of seven Islamic banks using the method of content analysis to measure the volume of CSR disclosure.FindingsThe results show the overall mean CSR disclosure index of one Islamic bank out of seven to be above average and the issues of CSR are not of major concern for most Islamic banks.Research limitations/implicationsCSR disclosure in the Islamic banks is experimental and could be explored in greater depth in future studies.Practical implicationsThe findings have important implications for academics and researchers, as they pave the ways for further investigation. The results also have important implication for Accounting and Auditing Organisation for Islamic Financial Institutions in developing a CSR reporting standard if Islamic banks are to enhance their image and reputation globally, as well as to remain competitive.Originality/valueThe paper contributes to the growing debate on CSR in ethical perspective and key underlying issues associated with the emergence of new disclosure practices for Islamic financial institutions. Through this paper, new visibilities explored, and competing dilemmas opened up.

Islamic Social Reporting in Islamic Banking: Stakeholders Theory Perspective

“…Based on our study ISR index scores show that the extent of disclosure is 26% that is out of our expectations. Our results are consistent with [10] and [24] who found a gap between expectations and actual disclosure of CSR and conclude that CSRD for IBs is very low. Our finding also shows that there are differences between two countries and it concludes that the rules and pressure from government have impact on the information disclosed by Islamic banks.…”

“…They found that level of social disclosure by IBs is far from their expectation (13.3%). [24] using content analysis in analyze annual reports of seven IBs and found that level of CSRD for their sample is thirty-eighth. That is comparatively low comparing with their expectations, objective, and values of IBs.…”

“…A number of studies have surveyed CSR disclosure in Islamic bank (IBs) ( [6], [10], and [24]). ( [25], [10]) open up additional analysis into this space by provides an ethical identity index.…”

Corporate Social Responsibility Practices of Malaysian Islamic Banks from the Shariah Perspective: A Focus on the Key Dimensions

“…Research and development. Hasan and Harahap (2010) also argue that Islamic banks should disclose all the above mentioned information under the CSR disclosure policies to facilitate users' evaluation and assessment of the financial position and performance of an Islamic bank. In fact, Islamic banks should be proactive in disclosing information that would enable users to make an economic decision from their accounting reports.…”

“…These features encompass underlying philosophy and values, provision of interest-free products and services, restriction to Islamic acceptable deals, focus on development and social goals, and subjection to additional reviews by the SSB. Hasan and Harahap (2010), who adopt Haniffa and Hudaib's (2007) research framework, examine the CSR disclosure of Islamic banks based on eight dimensions, as below:…”