Guidelines for developing the shari'ah‐compliant products and shari'ah governance for sustainable banks in Bangladesh

Author:

Uddin Mohammad Nazim1,Hosen Mosharrof2ORCID,Azad Md. Abul Kalam3,Günerhan Hatıra4,Hoque Nazamul1,Uddin Mahi1,Mamun Abdullahil1

Affiliation:

1. Department of Business Administration International Islamic University Chittagong Kumira Bangladesh

2. Faculty of Business and Management UCSI University Kuala Lumpur Malaysia

3. Department of Business and Technology Management Islamic University Technology Gazipur Bangladesh

4. Department of Mathematics Kafkas University Kars Turkey

Abstract

AbstractThe industry of Islamic banking and finance (IBF) has undergone rapid expansion over the past forty years. However, it's imperative that this sector continues to evolve—making sure it aligns with contemporary market trends while staying abreast with modern financial practices. With financial offerings becoming more complex than ever before, adhering closely to shari'ah principles certainly poses a newer level of daunting challenges that need urgent attention in this burgeoning field. Moreover, the infamous products and current shari'ah governance of Islamic banks have been widely debated following the publication of an article titled “Terrible November for Islamic banks” in a reputable newspaper, Prothom Alo, 2022. In order to bridge the gap this study investigates drivers, enablers, and inhibitors of shari'ah‐compliant products and the successful implementation of shari'ah governance for sustainable Islamic banks in Bangladesh. The qualitative data have been collected through in‐depth personal interviews and focus group discussions with 41 well‐known scholars. The analysis shows shari'ah board and research division are required to collaborate to develop shari'ah‐compliant products as outlined in the Qur'an and Hadith. Additionally, a strong legislative framework for shari'ah‐compliant product development and shari'ah governance is essential to promote a sustainable Islamic banking industry. Good shari'ah governance and compliance in a banking institution are significantly dependent on the good intentions of its board members and operational managers. The study offers a legal framework and core value‐based banking that develops unique and fully shari'ah‐compliant products to uphold sustainable development goals (SDGs). Important policy implications are discussed.

Publisher

Wiley

Subject

Strategy and Management,General Economics, Econometrics and Finance,Development

Reference73 articles.

1. shari'ah governance of Islamic banks in Bangladesh issues and challenges;Abdullah M. F.;Journal of Islamic Economics, Banking and Finance,2017

2. Ethics and social responsibility in Islamic banking;Afroze R.;ASA University Review,2015

3. Perception of bankers and customers towards deposit and investment mechanisms of Islāmic and conventional banking: Empirical evidence from Bangladesh;Ahmad A. U. F.;Journal of Islamic Business and Management,2014

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