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Shari’ah compliance in Islamic banking: An empirical study on selected Islamic banks in Bangladesh

Hafij Ullah (Department of Business Administration, Faculty of Business Studies, International Islamic University Chittagong, Chittagong, Bangladesh)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 10 June 2014

2982

Abstract

Purpose

The purpose of this paper is to evaluate the Shari’ah compliance status of the Islamic banks in Bangladesh.

Design/methodology/approach

The research was based on both primary and secondary materials. The primary data were gathered through sample questionnaire survey and personal interviews by the researcher; the secondary data were obtained from Qur’an, Hadiths, different circulars/letters, manuals, research books and journals, annual reports, Web sites of the sample banks. Statistical tools and techniques like weighted average, percentage, SD, variance and correlation between Shari’ah violation score and bank-specific attributes were used applying statistical software Statistical Package for Social Science (version 17.0).

Findings

Shari’ah compliance status of the Islamic banks in Bangladesh is in a vulnerable condition, Shari’ah compliance status highly varies among the Islamic banks, and Shari’ah violation is high in investing activities because of lack of knowledge, lack of sincerity in complying Shari’ah, poor attention in Shari’ah audit and Shari’ah research and lack of strong Shari’ah supervisory board comprising full-time skillful members.

Practical implications

Among others, the major policy implications of this study are as follows: regulatory bodies and Shari’ah board members are expected to have guidelines from this study to find their limitations and to determine their future responsibilities; executives and Employees are expected to get the idea of present state of Shari’ah compliance and to identify their weaknesses in this regard; clients and other stakeholders are expected to have guidelines to choose the better Islamic banks to perform banking transactions; and the researchers in Islamic banking may usefully use the issues raised in this article for more comprehensive studies in Islamic banking and Shari’ah compliance.

Originality/value

The paper opens a new avenue in justifying the status of Shari’ah compliance with a new dataset and correlating Shari’ah violation score with bank-specific attributes.

Keywords

Citation

Ullah, H. (2014), "Shari’ah compliance in Islamic banking: An empirical study on selected Islamic banks in Bangladesh", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 7 No. 2, pp. 182-199. https://doi.org/10.1108/IMEFM-06-2012-0051

Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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