The influences of board of directors and management in Shariah governance guidelines of the Islamic banks in Bangladesh

Abstract

Purpose The purpose of this paper is to investigate the influence of board of directors (BODs) and management in the decision-making of Shariah supervisory board (SSB) and implementation of their decisions. Design/methodology/approach The paper implements qualitative case research to explore the influences of BODs and management in the context of Bangladesh. To accomplish the research objective, we collected data from the 17 respondents from the regulators, Shariah supervisory boards, Shariah department executives and Shariah experts from the central bank and Islamic banks of Bangladesh. Findings This study found that management of Islamic banks indirectly influences the practices and functions of SSB, their decision-making and other activities. However, from either ethical or moral ground, management cannot influence SSB; management does not have legitimate power to control over their activities. Sometimes the BODs and management use the SSB and Shariah executives as a showcase and rubber stamp to accomplish their goals and to maximize profit in either partially or fully. Management assumes that Shariah officers are accomplishing and minimizing their income and hindering business functions without any contributions. Research limitations/implications The study significantly contributed to the national and global regulatory bodies by providing suggestions that regulatory bodies should be more concerned with the independence of SSB and Shariah executive officers. Besides, the BODs and management should be careful in handling Shariah issues as they were committed to do Islamic banking as per Shariah law. The study has theoretical contributions regarding the stakeholder and legitimacy theories. Originality/value This is the first research which extends the literature of the Islamic banking and Shariah governance mechanisms in perspective of Bangladesh concerning the influence of BODs and management in the decision-making of SSB and implementation of their decisions.