Ahmed, Irfan and Akhtar, Muhammad and Ahmed, Ishaq and Aziz, Saima,(2017), PRACTICES OF ISLAMIC BANKING IN THE LIGHT OF ISLAMIC ETHICS: A CRITICAL REVIEW. , International Journal of Economics, Management and Accounting, UNSPECIFIED
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Abstract
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
466 International Journal of Economics, Management and Accounting 25, no. 3 (2017)
of the Organization of Islamic Countries (OIC) and the governments of Islamic countries.
Keywords : | Islamic banking, Sharī‘ah compliance, AAOIFI standards, Hybrid practices, Earnings management, UNSPECIFIED |
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Journal or Publication Title: | International Journal of Economics, Management and Accounting |
Volume: | 25 |
Number: | 3 |
Item Type: | Article |
Subjects: | Ekonomi Islam |
Depositing User: | Users 15 not found. |
Date Deposited: | 26 Dec 2019 04:11 |
Last Modified: | 26 Dec 2019 04:11 |
URI: | https://repofeb.undip.ac.id/id/eprint/794 |