Islamic Banking: Issues in Prudential Regulations and Supervision

Errico, Luca; Farahbaksh, Mitra

doi:10.5089/9781451980417.001

Cited by 107 publications

(49 citation statements)

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“…Islamic banking and finance are emerging more and more as viable alternatives to conventional interest-based banking and financing [11]. The rules and regulations of Islamic finance have been extensively studied in the literature see for example [2,6,11,12,[32][33][34][35]. Despite of that, Islamic banking is rarely investigated from technical perspective especially from information technically design and modeling viewpoint.…”

Section: Related Workmentioning

confidence: 99%

“…Currently, active boards provide policies that control Shariah compliant in general. Performing this task on day-today banking operations and transformations is very challenging In general, there is a widely spread agreement on the need for current banks in the Islamic world to be able to handle systematically financial transactions that are approved by Shariah regulations [13,33,36]. Islamic Development Bank (IDB) has been leading an effort recently to develop systems according to such regulations [17,37].…”

Section: Related Workmentioning

confidence: 99%

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Building an Islamic financial information system based on policy managements

Alsmadi

Zarour

2015

Journal of King Saud University - Computer and Information Scie

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For many banks and customers in the Middle East and Islamic world, the availability and the ability to apply Islamic Shariah rules on financial activities is very important. In some cases, business and technical barriers can limit the ability to apply and offer financial services that are implemented according to Shariah rules. In this paper, we discuss enforcing Shariah rules from information technology viewpoint and show how such rules can be implemented and enforced in a financial establishment. Security authorization standard XACML is extended to consider Shariah rules. In this research XACML architecture, that is used and applied in many tools and system architectures, is used to enforce Shariah rules in the banking sector rather than its original goal of enforcing security rules where policy management systems such as XACML are usually used. We developed a model based on XACML policy management to show how an Islamic financial information system can be used to make decisions for day to day bank activities. Such system is required by all Islamic banks around the world. Currently, most Islamic banks use advisory boards to provide opinions on general activities. The gap between those high level general rules and decision for each customer business process is to be filled by Islamic financial information systems. The flexible design of the architecture can also be effective where rules can be screened and revisited often without the need to restructure the authorization system implemented. Authorization rules described here are not necessarily the perfect reflection of Shariah opinions. They are only shown as a proof of concept and a demonstration of how such rules can be written and implemented.

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Section: Related Workmentioning

confidence: 99%

Section: Related Workmentioning

confidence: 99%

Building an Islamic financial information system based on policy managements

Alsmadi

Zarour

2015

Journal of King Saud University - Computer and Information Scie

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“…Islamic banks give their investment holders the profit on their investments which depends on the profit that the bank has acquired involving risks for the account holders (Errico and Farahbaksh, 1998). IAHs and shareholders are the two types of capital providers that the Islamic banks have.…”

Section: Separation Of Ownership and Control Rights In Islamic Financmentioning

confidence: 99%

An evaluation of corporate governance practices of Islamic banks versus Islamic bank windows of conventional banks

Bukhari

Awan

Ahmed

2013

Management Research Review

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to explore the perceived importance of management about various corporate governance dimensions being practiced in the Pakistani Islamic banking context. Design/methodology/approach -AHP is applied to analyze the corporate governance indexes and its dimension of five Islamic banks and 12 conventional banks which are providing Islamic banking facilities (Islamic bank window) throughout Pakistan. These dimensions included board of directors (BOD), Shari'ah supervisory board (SSB), audit, investment account holders (IAH), and information disclosure & transparency.Findings -The study reveals that the most significant dimensions which affect the corporate governance in Islamic banks are BOD and SSB, while the significant factors for Islamic banking windows are almost all dimensions of corporate governance. The correlation, regression, and ANOVA tests are applied to check the contributions of various factors of corporate governance mechanisms. These results indicate that there is a significant difference between Islamic banks and Islamic banking windows regarding the BOD and SSB. On the other hand, no significant difference is seen for the rest of the factors. The dissatisfaction level of customers reduces with the increase in the audit and BOD governance and all other factors have no impact in the case of Islamic banking windows; whereas in Islamic banks, in addition to audit and the SSB, information disclosure also significantly reduces the dissatisfaction level of customers. The concern of customers decreases significantly with the increasing level of IAH in the case of Islamic banking windows whereas in the case of Islamic banks a significant impact is seen for BOD, information disclosure, audit and IAH, but improvement in the governance of these rather increases the concern of customers toward compliance of Shari'ah and SSB has no contribution towards the concern of customers. Originality/value -This study has practical significance for conventional and Islamic banking policy makers for understanding the requirements of their stakeholders and aligning them with the fundamentals of Shari'ah compliance according to the guidelines provided by t...

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“…Bai' Murabahah represents the cost-plus (Murabahah) sale while Bai' Salam described further connotes the Islamic forward (Salam) sale. 6 The current state of Islamic banking has been severely criticized by Aggarwal and Yousef (2000) and Errico and Farahbaksh (1998), among others. One of the problems pointed out is the excessive use of the Murabahah structured in a way to resemble a financial facility bearing a fixed (ribawi) rate of return without being subject to risk.…”

Section: Introductionmentioning

confidence: 99%