Mahfuza Kamal Runy
Department of Management, Eden Mohila College, Dhaka, Bangladesh

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The influences of Shariah governance mechanisms on Islamic banks performance and Shariah compliance quality Md. Kausar Alam; Mohammad Mizanur Rahman; Mahfuza Kamal Runy; Babatunji Samuel Adedeji; Md. Farjin Hassan
Asian Journal of Accounting Research Volume ahead-of-print Issue ahead-of-print
Publisher : Emerald Publishing Limited

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.1108/AJAR-11-2020-0112

Abstract

The purpose of this paper is to examine the influences of Shariah governance (SG) mechanisms on Islamic banks' performance and Shariah compliance quality in the context of Bangladesh.A semi-structured personal interview tactic was applied to accomplish the research objectives. The data were collected from the regulators, Shariah supervisory boards, Shariah department executives and Shariah experts from the Central Bank (Bangladesh Bank) and Islamic banks in Bangladesh.The study discovers that the quality of the Board of Directors (BODs), Shariah Supervisory Board (SSB), management and Shariah executives have both positive and negative influences on the Shariah compliance quality, image, goodwill and performance of Islamic banks' in Bangladesh. The compositions, formations and quality of SSB and Shariah officers positively influence the Islamic banks' fatwas, Shariah decisions, compliance quality and firm performance. The study also finds that prevailing banking pressure, current political situation, the willingness of BOD and management and social limitations impact Islamic banks' performance, Shariah compliance quality, image and goodwill.Based on our findings, if the regulators, BODs and Islamic banks can manage effective and efficient executives, it will create a positive impact on Islamic banks' performance, image, goodwill and quality compliance. As the prevailing banking pressure, current political situation and social limitations hinder the functions and employment system of the Islamic banks as well as result the Islamic banks' image, performance, Shariah implementations and compliance. Thus, the theorist needs to consider these mechanisms in extending the agency, stakeholder and resource dependence theories.This research extends the literature concerning the influences of Islamic banks' SG mechanisms in Bangladesh. The study also argued not only the efficient and effective mechanisms but also the prevailing banking pressure, current political situation and social limitations impact on Islamic banks' performance and Shariah compliance quality.