The full-text may be used and/or reproduced, and given to third parties in any format or medium, ... more The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that: • a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.
International Journal of Business Governance and Ethics
This study explores the modus operandi and regulatory influence of the pioneering Malaysian dual-... more This study explores the modus operandi and regulatory influence of the pioneering Malaysian dual-layer governance system where, besides an Islamic bank's in-house religious board, supervision is undertaken by the country's Central Bank via its own Shariah Advisory Council (SAC). Data was collected by means of an in-depth interview survey with SAC members, Central Bank compliance officers, Bank Chairmen and members of Shariah boards, CEO's and other senior executives. We find that the procedures asserted by this over-arching governance structure contributes to standardising practice without hampering creativity when innovating new products. Considerable bureaucracy is also found to exist due the the current approval process impeding efficient decision-making. In addition, we find the SAC to be decisive in resolving disputes from the widespread use of the 'legal reasoning' (or Ijtihad) principle exercised by boards providing the much needed confidence and market discipline required by stakeholders. Finally, we highlight how this form of banking operates best when left to a country's own governance framework rather than imposing international regulation for this nascent industry.
International Centre for Education in Islamic Finance (INCEIF). Previously he was involved in res... more International Centre for Education in Islamic Finance (INCEIF). Previously he was involved in research and teaching in Islamic economics and finance for over thirty years and he founded the Durham University Islamic Finance Programme. Before joining INCEIF he was a Visiting Professor at the Qatar Faculty of Islamic Studies. Rafe Haneef is currently CEO of HSBC Amanah Malaysia. He has played a leadership role in developing Sukuk and Islamic structured and project finance since 1999 at HSBC, ABN AMRO and Citigroup. He is also a member of the Shariʿah Advisory Council of Securities Commission Malaysia.
This paper develops a framework of assessing de jure adoption of Sharīʿah governance standards of... more This paper develops a framework of assessing de jure adoption of Sharīʿah governance standards of international standards setting bodies and uses it to assess the legal and regulatory framework of Sharīʿah governance regimes (SGR). Using leximetrics and content analysis, the framework is used to assess SGR in four countries (Kuwait, Malaysia, Pakistan and UAE) in an objective manner. The results show that Malaysia has the most robust SGR and UAE has the weakest legal and regulatory environment of Sharīʿah governance. The results also identify the weaknesses in the SGR and areas that can be improved further. Furthermore, the paper reveals the diversity in the qualitative nature of SGR in terms of the extent to which the laws and regulations are used to develop the SGR in different countries. As the Islamic financial industry continues to grow globally, regulators would need to mitigate the Sharīʿah noncompliant risk by introducing the international Sharīʿah governance standards to promote growth and ensure stability of the sector. The framework to assess the SGR can be a used as a first step to assess the SGR in different jurisdictions to identify the weaknesses and come up with relevant laws and regulations to strengthen the SGR for the development of a robust Islamic financial sector.
Palgrave Studies in Islamic Banking, Finance, and Economics
Maqāṣid is presumably one of today's most important intellectual means and methodologies for Isla... more Maqāṣid is presumably one of today's most important intellectual means and methodologies for Islamic studies, particularly in Islamic jurisprudence (Auda 2008). Outside this area, however, it is rarely discussed in contemporary Islamic scholarships. This is presumably related to the difficulties in translating the concept into workable developmental models and policies (Kasri 2012). As such, even though there have
The paper studied the role of zakah and macroeconomic policies aimed at growth of income and prov... more The paper studied the role of zakah and macroeconomic policies aimed at growth of income and providing opportunities to the poor in eliminating poverty. Simulation of various macroregimes and zakah schemes for Bangladesh indicate that while macroeconomic policies play an important role in reducing poverty, poverty cannot be eliminated without using zakah in an effective way. The paper also suggests that there are certain conditions under which zakah will be able to make an impact on poverty. First, zakah has to be complimented by robust macroeconomic policies that enhance growth and also redistribute income to eliminate poverty. Second, while more zakah has to be collected and disbursed, the impact on poverty will only be significant when a larger percentage of zakah proceeds are used for productive purposes. Given the important role of zakah in poverty alleviation, there is a need for countries to integrate this vital faith-based institution in the development strategy and programs...
Khan (1997) suggests a variety of activities like qard-hasan, financing housing, meeting basic ne... more Khan (1997) suggests a variety of activities like qard-hasan, financing housing, meeting basic needs, and promoting and financing small entrepreneurs. All these aspects, however, can be covered in a comprehensive integrated program with focus on microfinancing. 2 For an extensive study on microfinance, see Hulme and Mosley (1996a &b),
Contemporary practice of Islamic finance has been criticised for not fulfilling the maqasid. The ... more Contemporary practice of Islamic finance has been criticised for not fulfilling the maqasid. The debate surrounding the practice of Islamic finance has led to the distinction between Shari'ah-compliant and Shari'ah-based Islamic products. However, there are no clear definitions as to what these terms entail. Whereas some scholars assert that Shari'ah-compliant and Shari'ah-based products are the same, there is a need to distinguish between different nuances of Islamic finance in terms of legal and social Shari'ah requirements. In this research note (note), an objective way of classifying categories of Islamic financial products is suggested. In particular, the legal and social Shari'ah requirements implied in the maqasid are used to classify Islamic financial products as Shari'ah-based, Shari'ah-compliant and pseudo-Islamic. The note also identifies the role of different stakeholders in choosing the types of products.
Purpose: This study investigates the relationship between corporate governance and shariah noncom... more Purpose: This study investigates the relationship between corporate governance and shariah noncompliant risk (SNCR) that is unique for Islamic banks. The study examines the roles of shariah committee along with the board of directors in mitigating SNCR.
Financing small and medium enterprises is viewed as a new paradigm to alleviate poverty and bring... more Financing small and medium enterprises is viewed as a new paradigm to alleviate poverty and bring about development. Specialized poverty-focused microfinance institutions have evolved in last 25 years to finance microentrepreneurs. Problems facing these institutions are, among others, non-viability and dependence on subsidized funds for operations. Recently, a few Islamic microfinance institutions have also started operations in some countries. Operations of these institutions, however, have limited impact due to lack of funds and trained employees. Unlike conventional banks, Islamic banks' objectives should include social dimensions. Given this social role, Islamic banks can complement the efforts of Islamic microfinance institutions in providing the much-needed funds to the poor to facilitate their economic upliftment. The paper asserts that Islamic banks are predisposed to provide microfinance in a "win-win" situation. In other words, Islamic banks can finance the p...
Whereas Indonesia has the largest Muslim country in the world with 88 % of 237 million population... more Whereas Indonesia has the largest Muslim country in the world with 88 % of 237 million population belonging to the faith, the growth of Islamic microfinance institutions (MFIs) has being sluggish and far behind their conventional counterparts. Islamic MFIs are struggling to survive amid the fierce competition in the provision of microfinance services, from both the conventional and Islamic. This paper will examine the factors determining the demand for microfinance services by reporting results from a survey of the perceptions and preferences of 581 MFI’s borrowers from four MFIs—two Islamic (BMT and BPRS) and two conventional (BRI and BPR) in Indonesia. The results show that while the majority of MFI’s clients indicates preference for Islamic MFIs, in reality their choices of MFI are based on economic (low interest rates and size of loan) and non-economic factors (such as quality of services variables easiness, speed, nearness, method and loan officers’ profile). The results indica...
Acknowledgements List of Tables List of Figures List of Abbreviations Note on Arabic Terms and Ve... more Acknowledgements List of Tables List of Figures List of Abbreviations Note on Arabic Terms and Veneration 1. Introduction 2. Islamic Law and Finance: Concepts and Principles 3. Islamic Banking: Institutional Environment, Organizational Design and Product Features 4. Innovation and Product Development: Strategy, Structure and Process 5. Product Development Practices in Islamic Banks 6. Islamic Financial Products: Categories and Controversies 7. Shari'ah Based Islamic Finance: The Way Forward Conclusion Glossary of Arabic Words References.
Although the key distinguishing feature of Islamic finance is compliance with Sharīʿah, there is ... more Although the key distinguishing feature of Islamic finance is compliance with Sharīʿah, there is criticism from various quarters on the Sharīʿah compliance of its products. However, there is no objective way to assess the Sharīʿah compliance of Islamic financial contracts. This article develops a structured framework for analysing Sharīʿah compliance of Islamic financial contracts by deconstructing them and developing principles of evaluation based on concepts from Islamic legal theory. Other than providing a framework to assess Sharīʿah compliance of Islamic financial contracts, this article also alludes to an important issue regarding the contracts’ flexibility. Using concepts from Islamic legal theory, the article classifies different contractual stipulations according to their legal weight, and identifies how legal perspectives on the requirements of compliance can determine the flexibility of contracts. An evaluative framework is used to assess the Sharīʿah compliance of an act...
International Journal of Academic Research in Business and Social Sciences, Nov 6, 2017
The objective of this paper is to examine the significance of Islamic ethics principles towards q... more The objective of this paper is to examine the significance of Islamic ethics principles towards quality accounting practices. This paper also explores the suitability of Islamic ethics principles to be integrated in accounting education to develop ethical accounting students. A quantitative research method through questionnaire was adopted to collect data. The sample of this paper consists of 195 accounting educators from Malaysian public universities. The finding reveals that Islamic ethics principles were suitable in directing user towards Islamic behavior. The results of a correlations analysis indicated that Islamic ethics principles positively and significantly correlated with quality accounting practice and the development of ethical accounting students. Thus, the study suggests that education system should emphasize on student's moral development and consider integrating Islamic ethical principles in the accounting curriculum.
This paper develops a conceptual framework for ethical decision making in Islamic financial insti... more This paper develops a conceptual framework for ethical decision making in Islamic financial institution based on the Islamic methodological approaches on ethics. While making use of the similarities between the scientific method and the Islamic jurisprudence method, a framework is developed by means of argumentation and reasoning to integrate Sharia doctrines with the PDCA cycle as a managerial tool. Using Al-Raysuni's analysis of Al-Shatibi's work on maqasid al , the paper develops a framework to assess the ethical aspects of Islamic financial operations which is then applied to hypothetical cases. The approach can help overcome the methodological deficiencies in measuring ethical performance in Islamic finance by focusing on the process of ethical decision making that leads to the outcomes of organisational behaviour beyond legality of contracts. The framework outlines the conditions under which an activity that is considered legal and permissible contractually could lead to outcomes that can make it ethical or unethical.
Purpose Since International Financial Reporting Standards (IFRS) are not primarily meant for the ... more Purpose Since International Financial Reporting Standards (IFRS) are not primarily meant for the accounting needs of Islamic banks, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) was established to develop specific accounting standards for Shari’ah compliance. The purpose of this paper is to assess the de jure harmonisation between the disclosure requirements of the IFRS-based Malaysian Accounting Standards (MAS) and those of the AAOIFI. Design/methodology/approach Using Malaysia as a case study, the paper examines the extent of the de jure congruence between the IFRS-based MAS and AAOIFI’s Financial Accounting Standard No 1 (FAS1), which is considered to be one of the key disclosure standards for Islamic banks. We employ leximetrics and content analysis to analyse these accounting standards and the additional guidelines introduced by the Malaysian Accounting Standards Board (MASB) and the Central Bank of Malaysia (Bank Negara Malaysia, BNM) to ...
This article provides a framework for applying the principles of Islamic legal methodology to det... more This article provides a framework for applying the principles of Islamic legal methodology to determine the optimal Shariah screening standards for Islamic equity markets. It is argued that using maslahah mursalah (unrestricted benefit) is an appropriate method for identifying appropriate financial standards and its principles stipulate that the benchmark that yields the best economic returns to investors should be chosen. The methodological framework is applied to the Indonesia equity market where the economic implications of the Islamic stock screening standards of the Indonesian Islamic Shariah Stock Index and four global indices are assessed. Portfolios are constructed by applying Islamic stock screening standards for each of the indices by using data on 377 stocks listed in the Indonesian stock market for 5 years. The performances measured by the Sharpe ratio, Treynor index, and Jensen alpha reveal that the Dow Jones Islamic Index screening criteria performs the best. Based on the method of maslahah mursalah, the article recommends using the screening standard of this index in the Indonesian stock market to maximize benefits to investors. While the approach used in this article is applied to Islamic equity markets, the methodological framework can also be used for other similar cases in Islamic finance.
Islamic financial institutions provide financial services that abide by the principles and goals ... more Islamic financial institutions provide financial services that abide by the principles and goals of Islamic law (Shari’ah). To ensure the compliance of the operations and products with Islamic law, a Shari’ah governance mechanism must be established. To understand the scope of Shari’ah governance the stakeholders of the Islamic banking industry and Shari’ah requirements need to be identified. The type of Shari’ah governance framework for Islamic finance will depend on the legal and regulatory environment in different jurisdictions. At organizational level, the overall corporate governance framework in Islamic banks will define the role of Shari’ah governance. After identifying four Shari’ah governance regimes existing in different countries, the paper suggests an optimal Shari’ah governance framework that can reduce the Shari’ah complaint risks and ensure long-term growth of the industry. - Le istituzioni finanziarie islamiche forniscono servizi nel rispetto dei principi e degli obi...
The full-text may be used and/or reproduced, and given to third parties in any format or medium, ... more The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that: • a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.
International Journal of Business Governance and Ethics
This study explores the modus operandi and regulatory influence of the pioneering Malaysian dual-... more This study explores the modus operandi and regulatory influence of the pioneering Malaysian dual-layer governance system where, besides an Islamic bank's in-house religious board, supervision is undertaken by the country's Central Bank via its own Shariah Advisory Council (SAC). Data was collected by means of an in-depth interview survey with SAC members, Central Bank compliance officers, Bank Chairmen and members of Shariah boards, CEO's and other senior executives. We find that the procedures asserted by this over-arching governance structure contributes to standardising practice without hampering creativity when innovating new products. Considerable bureaucracy is also found to exist due the the current approval process impeding efficient decision-making. In addition, we find the SAC to be decisive in resolving disputes from the widespread use of the 'legal reasoning' (or Ijtihad) principle exercised by boards providing the much needed confidence and market discipline required by stakeholders. Finally, we highlight how this form of banking operates best when left to a country's own governance framework rather than imposing international regulation for this nascent industry.
International Centre for Education in Islamic Finance (INCEIF). Previously he was involved in res... more International Centre for Education in Islamic Finance (INCEIF). Previously he was involved in research and teaching in Islamic economics and finance for over thirty years and he founded the Durham University Islamic Finance Programme. Before joining INCEIF he was a Visiting Professor at the Qatar Faculty of Islamic Studies. Rafe Haneef is currently CEO of HSBC Amanah Malaysia. He has played a leadership role in developing Sukuk and Islamic structured and project finance since 1999 at HSBC, ABN AMRO and Citigroup. He is also a member of the Shariʿah Advisory Council of Securities Commission Malaysia.
This paper develops a framework of assessing de jure adoption of Sharīʿah governance standards of... more This paper develops a framework of assessing de jure adoption of Sharīʿah governance standards of international standards setting bodies and uses it to assess the legal and regulatory framework of Sharīʿah governance regimes (SGR). Using leximetrics and content analysis, the framework is used to assess SGR in four countries (Kuwait, Malaysia, Pakistan and UAE) in an objective manner. The results show that Malaysia has the most robust SGR and UAE has the weakest legal and regulatory environment of Sharīʿah governance. The results also identify the weaknesses in the SGR and areas that can be improved further. Furthermore, the paper reveals the diversity in the qualitative nature of SGR in terms of the extent to which the laws and regulations are used to develop the SGR in different countries. As the Islamic financial industry continues to grow globally, regulators would need to mitigate the Sharīʿah noncompliant risk by introducing the international Sharīʿah governance standards to promote growth and ensure stability of the sector. The framework to assess the SGR can be a used as a first step to assess the SGR in different jurisdictions to identify the weaknesses and come up with relevant laws and regulations to strengthen the SGR for the development of a robust Islamic financial sector.
Palgrave Studies in Islamic Banking, Finance, and Economics
Maqāṣid is presumably one of today's most important intellectual means and methodologies for Isla... more Maqāṣid is presumably one of today's most important intellectual means and methodologies for Islamic studies, particularly in Islamic jurisprudence (Auda 2008). Outside this area, however, it is rarely discussed in contemporary Islamic scholarships. This is presumably related to the difficulties in translating the concept into workable developmental models and policies (Kasri 2012). As such, even though there have
The paper studied the role of zakah and macroeconomic policies aimed at growth of income and prov... more The paper studied the role of zakah and macroeconomic policies aimed at growth of income and providing opportunities to the poor in eliminating poverty. Simulation of various macroregimes and zakah schemes for Bangladesh indicate that while macroeconomic policies play an important role in reducing poverty, poverty cannot be eliminated without using zakah in an effective way. The paper also suggests that there are certain conditions under which zakah will be able to make an impact on poverty. First, zakah has to be complimented by robust macroeconomic policies that enhance growth and also redistribute income to eliminate poverty. Second, while more zakah has to be collected and disbursed, the impact on poverty will only be significant when a larger percentage of zakah proceeds are used for productive purposes. Given the important role of zakah in poverty alleviation, there is a need for countries to integrate this vital faith-based institution in the development strategy and programs...
Khan (1997) suggests a variety of activities like qard-hasan, financing housing, meeting basic ne... more Khan (1997) suggests a variety of activities like qard-hasan, financing housing, meeting basic needs, and promoting and financing small entrepreneurs. All these aspects, however, can be covered in a comprehensive integrated program with focus on microfinancing. 2 For an extensive study on microfinance, see Hulme and Mosley (1996a &b),
Contemporary practice of Islamic finance has been criticised for not fulfilling the maqasid. The ... more Contemporary practice of Islamic finance has been criticised for not fulfilling the maqasid. The debate surrounding the practice of Islamic finance has led to the distinction between Shari'ah-compliant and Shari'ah-based Islamic products. However, there are no clear definitions as to what these terms entail. Whereas some scholars assert that Shari'ah-compliant and Shari'ah-based products are the same, there is a need to distinguish between different nuances of Islamic finance in terms of legal and social Shari'ah requirements. In this research note (note), an objective way of classifying categories of Islamic financial products is suggested. In particular, the legal and social Shari'ah requirements implied in the maqasid are used to classify Islamic financial products as Shari'ah-based, Shari'ah-compliant and pseudo-Islamic. The note also identifies the role of different stakeholders in choosing the types of products.
Purpose: This study investigates the relationship between corporate governance and shariah noncom... more Purpose: This study investigates the relationship between corporate governance and shariah noncompliant risk (SNCR) that is unique for Islamic banks. The study examines the roles of shariah committee along with the board of directors in mitigating SNCR.
Financing small and medium enterprises is viewed as a new paradigm to alleviate poverty and bring... more Financing small and medium enterprises is viewed as a new paradigm to alleviate poverty and bring about development. Specialized poverty-focused microfinance institutions have evolved in last 25 years to finance microentrepreneurs. Problems facing these institutions are, among others, non-viability and dependence on subsidized funds for operations. Recently, a few Islamic microfinance institutions have also started operations in some countries. Operations of these institutions, however, have limited impact due to lack of funds and trained employees. Unlike conventional banks, Islamic banks' objectives should include social dimensions. Given this social role, Islamic banks can complement the efforts of Islamic microfinance institutions in providing the much-needed funds to the poor to facilitate their economic upliftment. The paper asserts that Islamic banks are predisposed to provide microfinance in a "win-win" situation. In other words, Islamic banks can finance the p...
Whereas Indonesia has the largest Muslim country in the world with 88 % of 237 million population... more Whereas Indonesia has the largest Muslim country in the world with 88 % of 237 million population belonging to the faith, the growth of Islamic microfinance institutions (MFIs) has being sluggish and far behind their conventional counterparts. Islamic MFIs are struggling to survive amid the fierce competition in the provision of microfinance services, from both the conventional and Islamic. This paper will examine the factors determining the demand for microfinance services by reporting results from a survey of the perceptions and preferences of 581 MFI’s borrowers from four MFIs—two Islamic (BMT and BPRS) and two conventional (BRI and BPR) in Indonesia. The results show that while the majority of MFI’s clients indicates preference for Islamic MFIs, in reality their choices of MFI are based on economic (low interest rates and size of loan) and non-economic factors (such as quality of services variables easiness, speed, nearness, method and loan officers’ profile). The results indica...
Acknowledgements List of Tables List of Figures List of Abbreviations Note on Arabic Terms and Ve... more Acknowledgements List of Tables List of Figures List of Abbreviations Note on Arabic Terms and Veneration 1. Introduction 2. Islamic Law and Finance: Concepts and Principles 3. Islamic Banking: Institutional Environment, Organizational Design and Product Features 4. Innovation and Product Development: Strategy, Structure and Process 5. Product Development Practices in Islamic Banks 6. Islamic Financial Products: Categories and Controversies 7. Shari'ah Based Islamic Finance: The Way Forward Conclusion Glossary of Arabic Words References.
Although the key distinguishing feature of Islamic finance is compliance with Sharīʿah, there is ... more Although the key distinguishing feature of Islamic finance is compliance with Sharīʿah, there is criticism from various quarters on the Sharīʿah compliance of its products. However, there is no objective way to assess the Sharīʿah compliance of Islamic financial contracts. This article develops a structured framework for analysing Sharīʿah compliance of Islamic financial contracts by deconstructing them and developing principles of evaluation based on concepts from Islamic legal theory. Other than providing a framework to assess Sharīʿah compliance of Islamic financial contracts, this article also alludes to an important issue regarding the contracts’ flexibility. Using concepts from Islamic legal theory, the article classifies different contractual stipulations according to their legal weight, and identifies how legal perspectives on the requirements of compliance can determine the flexibility of contracts. An evaluative framework is used to assess the Sharīʿah compliance of an act...
International Journal of Academic Research in Business and Social Sciences, Nov 6, 2017
The objective of this paper is to examine the significance of Islamic ethics principles towards q... more The objective of this paper is to examine the significance of Islamic ethics principles towards quality accounting practices. This paper also explores the suitability of Islamic ethics principles to be integrated in accounting education to develop ethical accounting students. A quantitative research method through questionnaire was adopted to collect data. The sample of this paper consists of 195 accounting educators from Malaysian public universities. The finding reveals that Islamic ethics principles were suitable in directing user towards Islamic behavior. The results of a correlations analysis indicated that Islamic ethics principles positively and significantly correlated with quality accounting practice and the development of ethical accounting students. Thus, the study suggests that education system should emphasize on student's moral development and consider integrating Islamic ethical principles in the accounting curriculum.
This paper develops a conceptual framework for ethical decision making in Islamic financial insti... more This paper develops a conceptual framework for ethical decision making in Islamic financial institution based on the Islamic methodological approaches on ethics. While making use of the similarities between the scientific method and the Islamic jurisprudence method, a framework is developed by means of argumentation and reasoning to integrate Sharia doctrines with the PDCA cycle as a managerial tool. Using Al-Raysuni's analysis of Al-Shatibi's work on maqasid al , the paper develops a framework to assess the ethical aspects of Islamic financial operations which is then applied to hypothetical cases. The approach can help overcome the methodological deficiencies in measuring ethical performance in Islamic finance by focusing on the process of ethical decision making that leads to the outcomes of organisational behaviour beyond legality of contracts. The framework outlines the conditions under which an activity that is considered legal and permissible contractually could lead to outcomes that can make it ethical or unethical.
Purpose Since International Financial Reporting Standards (IFRS) are not primarily meant for the ... more Purpose Since International Financial Reporting Standards (IFRS) are not primarily meant for the accounting needs of Islamic banks, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) was established to develop specific accounting standards for Shari’ah compliance. The purpose of this paper is to assess the de jure harmonisation between the disclosure requirements of the IFRS-based Malaysian Accounting Standards (MAS) and those of the AAOIFI. Design/methodology/approach Using Malaysia as a case study, the paper examines the extent of the de jure congruence between the IFRS-based MAS and AAOIFI’s Financial Accounting Standard No 1 (FAS1), which is considered to be one of the key disclosure standards for Islamic banks. We employ leximetrics and content analysis to analyse these accounting standards and the additional guidelines introduced by the Malaysian Accounting Standards Board (MASB) and the Central Bank of Malaysia (Bank Negara Malaysia, BNM) to ...
This article provides a framework for applying the principles of Islamic legal methodology to det... more This article provides a framework for applying the principles of Islamic legal methodology to determine the optimal Shariah screening standards for Islamic equity markets. It is argued that using maslahah mursalah (unrestricted benefit) is an appropriate method for identifying appropriate financial standards and its principles stipulate that the benchmark that yields the best economic returns to investors should be chosen. The methodological framework is applied to the Indonesia equity market where the economic implications of the Islamic stock screening standards of the Indonesian Islamic Shariah Stock Index and four global indices are assessed. Portfolios are constructed by applying Islamic stock screening standards for each of the indices by using data on 377 stocks listed in the Indonesian stock market for 5 years. The performances measured by the Sharpe ratio, Treynor index, and Jensen alpha reveal that the Dow Jones Islamic Index screening criteria performs the best. Based on the method of maslahah mursalah, the article recommends using the screening standard of this index in the Indonesian stock market to maximize benefits to investors. While the approach used in this article is applied to Islamic equity markets, the methodological framework can also be used for other similar cases in Islamic finance.
Islamic financial institutions provide financial services that abide by the principles and goals ... more Islamic financial institutions provide financial services that abide by the principles and goals of Islamic law (Shari’ah). To ensure the compliance of the operations and products with Islamic law, a Shari’ah governance mechanism must be established. To understand the scope of Shari’ah governance the stakeholders of the Islamic banking industry and Shari’ah requirements need to be identified. The type of Shari’ah governance framework for Islamic finance will depend on the legal and regulatory environment in different jurisdictions. At organizational level, the overall corporate governance framework in Islamic banks will define the role of Shari’ah governance. After identifying four Shari’ah governance regimes existing in different countries, the paper suggests an optimal Shari’ah governance framework that can reduce the Shari’ah complaint risks and ensure long-term growth of the industry. - Le istituzioni finanziarie islamiche forniscono servizi nel rispetto dei principi e degli obi...
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Papers by Habib Ahmed