Record Details

Practices of Islamic Banking in the Light of Islamic Ethics: A Critical Review

International Journal of Economics, Management and Accounting

View Archive Info
 
 
Field Value
 
Title Practices of Islamic Banking in the Light of Islamic Ethics: A Critical Review
 
Creator Ahmed, Irfan
Akhtar, Muhammad
Ahmed, Ishaq
Aziz, Saima
 
Description The purpose of this paper is to critically evaluate the practices of Islamic banks in the light of Islamic ethical values and philosophy of accountability to Allah and society. The paper’s structure comprises history and growth of Islamic banking, evaluation of non-compliance of Islamic banking with PLS modes of financing, emergence of earning management issues in Islamic banking, non-compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards, issue of diverse versions of Islamic rulings (fatwā), evaluation of practices against fundamental Islamic philosophy of “accountability to Allah and society” and discussions and concluding remarks for future development of Islamic banking. The findings show that Islamic banks defend their practices by taking Islamic rulings from Sharī‘ah  advisors in order to make them sharī‘ah  compliant not sharī‘ah  based. Profit maximization, availability of a vast range of Islamic rulings, market competition, lack of adequate risk management tools and trust on Islamic banking and meeting the general public expectations caused Islamic banks to comply with debt base modes of financing. Islamic Financial Institutions (IFIs) comply with International Financial Reporting Standard (IFRS), US Generally Accepted Accounting Principles (GAAP), domestic accounting standard or mix of these but do not adopt the AAOIFI standard in their financial reporting. This paper is a value addition in the literature of Islamic finance which suggests what it ought to be. It also discusses the role of the Organization of Islamic Countries (OIC) and the governments of Islamic countries.
 
Publisher Kulliyyah of Economics and Management Sciences
 
Contributor non funded
 
Date 2017-11-30
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/437
 
Source International Journal of Economics, Management and Accounting; Vol 25 No 3 (2017); 465-490
2462-1420
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/437/253
 
Rights Copyright (c) 2017 International Journal of Economics, Management and Accounting