Bassam Mohammad Maali, M. Kabir Hassan and Mamunur Rashid
Islamic banks (IBs) place significant importance on their religious identity, prompting the utilization of impression management (IM) strategies to emphasize such identity. This…
Abstract
Purpose
Islamic banks (IBs) place significant importance on their religious identity, prompting the utilization of impression management (IM) strategies to emphasize such identity. This paper aims to discuss the motivations behind using IM in the creation of religious identity by IBs, and to explore the use of religious symbols and language as a form of religious rhetoric. It is argued that to counteract the threats to their religious identity, IBs use IM techniques, predominantly through the inclusion of religious symbols and rhetoric.
Design/methodology/approach
An empirical exploratory study, using content analysis, was conducted on the annual reports of the largest IBs for the year 2022. The analyses involved a total of 39 banks based on a filtered list from The Banker’s Top Islamic Financial Institutions of 2022. A manual content analysis was undertaken to extract religious symbols, images and contents.
Findings
The findings reveal the use of IM techniques that emphasize the religious identity of these banks. Notably, IBs consistently reaffirm their commitment to Sharia compliance and disclose their contributions to Zakah. In addition, the analysis reveals the incorporation of Quranic verses, religious iconographic images and other religious rhetoric statements in the annual reports of many IBs.
Research limitations/implications
The analysis concludes that the assertion by IBs that their guiding principles are rooted in Islamic values are supported by the religious terminology and imagery embedded in their annual reports. Alongside mere religious symbolism, the terms and images are integral part of the corporate identity of the Islamic that not only sends persuasive signals to stakeholders but also help build an impression on the activities of the IBs.
Originality/value
IM has been a key objective and strategy of companies. This study aimed at exploring whether and how IBs used religious symbolism as an integral part of IM and corporate identity.
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Bassam Mohammad Maali, Usama Adnan Fendi and Muhannad Ahmad Atmeh
This paper aims to investigate the economic substance of Islamic banks’ transaction as perceived by the employees and regulators of banks and the effect of such substance on the…
Abstract
Purpose
This paper aims to investigate the economic substance of Islamic banks’ transaction as perceived by the employees and regulators of banks and the effect of such substance on the need for special accounting standards for Islamic banks. If there is a distinctive “Islamic economic substance”, then special accounting practices may be necessary such as the standards of the Accounting and Auditing Organization for Islamic Financial Institutions.
Design/methodology/approach
A qualitative inquiry on one of the leading Islamic banks in the Middle East was conducted to investigate the economic substance of the bank’s main two transactions; the deposit system and Murabaha financing, as perceived by informants within one of the earliest Islamic banks and its regulators.
Findings
It is found that despite the belief that the transactions under examination were different from equivalents within conventional banking, practice within the bank was not consistent with such a belief. Informants largely perceived the economic reality of the investigated transaction as being not different from conventional banks’ transactions, and this would affect the need for special accounting and regulatory frameworks.
Research limitations/implications
This investigation is confined to informants working within one Islamic bank; their views and perceptions may not coincide with those working in other Islamic banks in the world.
Practical implications
The results of this investigation provide policy implications for Islamic banks, regulators and standards setters in regard to the need for special accounting standards for Islamic banks.
Originality/value
The paper is one of the first papers that uses a qualitative inquiry on the main transactions of Islamic banks and the related need for special accounting practices. The paper provides a new perspective on the debate over whether Islamic banking is genuinely innovative or is merely a replicate for conventional banking.
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Muhannad Ahmad Atmeh, Bassam Mohammad Maali and Usama Fendi
This paper aims to propose a model of Zakah treatment for financial instruments. The model depends on the link between the financial assets and liabilities that emerge from a…
Abstract
Purpose
This paper aims to propose a model of Zakah treatment for financial instruments. The model depends on the link between the financial assets and liabilities that emerge from a financial instrument contract.
Design/methodology/approach
The determination of Zakah on contemporary financial instruments is controversial, with various conflicting Fatwas being presented. This paper introduces a theoretical model that integrates Fiqh rules, accounting, finance and economic principles to propose a method for calculating Zakah on financial instruments. This theoretical model can be the foundation for future empirical and statistical testing.
Findings
The proposed model advocates omitting the financial assets/liabilities when determining the Zakah base for companies, as the Zakah burden relies on the owner of the real asset. The paper elaborates on the implementation of the model on debts, investments and cash accounts.
Research limitations/implications
The paper does not investigate whether or not the accounting approach in dealing with financial contracts is deemed acceptable by Fiqh scholars, nor does it discuss whether or not this may affect the Zakah fatwas regarding these types of accounts.
Practical implications
The paper establishes a conceptual framework for the Zakah on financial assets. This will pave the way for future empirical research and testing to validate the framework in different contexts. In addition, if regulators adopt this model and apply it to all companies, it would promote fairness and justice at the national level.
Social implications
The proposed model advocates omitting the financial assets/liabilities when determining the Zakah base for companies, as the Zakah burden relies on the owner of the real asset. The paper elaborates on the implementation of the model on debts, investments and cash accounts.
Originality/value
To the best of the authors’ knowledge, this is the first attempt to utilize the accounting approach in order to determine the amount of Zakah.
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Bassam Mohammad Maali and Muhannad Ahmad Atmeh
The purpose of this paper is to examine the use of the social welfare concepts of Takaful and Tabarru’ (donations) as tools to guarantee deposits in the Islamic banking industry…
Abstract
Purpose
The purpose of this paper is to examine the use of the social welfare concepts of Takaful and Tabarru’ (donations) as tools to guarantee deposits in the Islamic banking industry, and the effect of such practice on the concept of risk sharing in Islamic finance.
Design/methodology/approach
The study critically analyzes the Mudaraba contract used by Islamic banks to mobilize funds, the use of Profit Equalization Reserves and Investment Risk Reserves, the use of other income smoothing techniques and the insurance of Islamic banks’ by regulatory agencies in some countries based on the Takaful and Tabarru’ concepts.
Findings
This paper shows that Islamic banks are increasingly using the concepts of Takaful and Tabarru’, which are intended originally for social welfare, as tools to justify the move to more guaranteed-in-substance type of deposits, and hence, more risk shifting rather than risk sharing in the Mudaraba contract. This use, is argued, moves Islamic banking towards more market-oriented, but less Shariaa-compliant in substance.
Research limitations/implications
This papers examined the behaviour of Islamic financial institutions and Islamic scholars based on the available literature. No empirical analysis was conducted.
Originality/value
This paper contributes to the ongoing debate about the substance of Islamic banking transactions and the risk shifting inherent in such transactions. Furthermore, it is the first study that examines the extent of utilizing different social welfare concepts to legalize – from Shariaa perspective – Islamic banking transactions.
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Abdelhafid Benamraoui, Tantawy Moussa and Mostafa Hussien Alsohagy
This paper aims to investigate the disparity and compliance of information disclosures in Islamic banks (IBs). Specifically, the research examines IBs’ compliance with Sharia…
Abstract
Purpose
This paper aims to investigate the disparity and compliance of information disclosures in Islamic banks (IBs). Specifically, the research examines IBs’ compliance with Sharia disclosure requirements.
Design/methodology/approach
To determine the extent of disclosures and compliance with Islamic business principles, content analysis is applied to the annual reports of a sample of IBs from 11 countries. A comprehensive reporting framework has also been developed to assess the transparency and compliance of IBs with Islamic business principles. Institutional theory and core Islamic principles are used to inform the study and its findings.
Findings
The results reveal that IBs demonstrate limited transparency on the key Sharia compliance issues, and there is a wide variation in the level of reporting across the countries studied. Moreover, the authors find that IBs located in the single integrated regulatory framework (RF) countries disclose more information, followed by those located in dual RF countries and then those located in Islamic RF countries.
Originality/value
This study presents a unique and comprehensive framework to assess the areas of Sharia disclosure by IBs and provides a conceptual rationing for the actual level of IBs’ Sharia reporting. This study also fills a significant gap in the literature, as most studies in this field are based on a single-country study. The results are deemed of direct relevance to IBs’ managers, investors, policymakers, regulators and the wider public, particularly in the Muslim world.