The Roles of Corporate Governance Towards Value-Oriented Islamic Finance Practices
DOI:
https://doi.org/10.33102/uij.vol27no1.72Keywords:
Islamic Finance, Value-Based Intermediation, Islamic Banking, Shariah, Corporate Social Responsibilities, CSR, IslamAbstract
This paper argues that while significant concerns have been invoked on the material aspects of Islamic finance such as financial growth and products sophistication, it is nevertheless observed that equal emphasizes have not been given on social objectives of Islamic Financial Institutions (IFIs) as part of its value-oriented frameworks. In the absence of extensive discourse on corporate governance and its roles on CSR, this paper attempts to highlight the importance of corporate governance in stimulating the social function of IFIs within the Islamic ethical dimension paradigm. This paper aims at expanding the normative objective function of IFIs by advocating corporate social responsibility (CSR) via strengthening the corporate governance framework. Unlike the western concept of corporate governance, which is based on the western business morality that derived from “secular humanist”, this paper suggests that corporate governance in IFIs is founded on the epistemological aspect of Tawhid, Shari’ah and ethics. This paper employs theoretical and case study research method to develop understanding and to advocate the notion of value oriented Islamic finance practices. The study utilizes descriptive, comparative and critical analysis approaches in extracting and analyzing the information.
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References
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Zeegers, J. (2001). What Should be the Social Responsibility of Banks? In Mayo, E. and Guene, C. (Ed.), Banking and Social Cohesion: Alternative Responses to a Global Market (153-157), Chalbury, UK: Jon Carpenter Publishing.
Aribi, Z. A. (2009). An Empirical Study of Corporate Social Responsibility and Its Disclosure in Islamic Financial Institutions. Unpublished Ph.d Thesis. University of Edinburgh Napier.
Asutay, M. (2010). Islamic Banking and Finance and Its Role in the GCC-EU Relationship: Principles, Developments and the Bridge Role of Islamic Finance, in Koch, C and Stenberg, L. (Ed.). The EU and the GCC: Challenges and Prospects under the Swedish EU Presidency, (pp. 35-58). Dubai: Gulf Research Centre
Asutay, M. (2008, October 1). Islamic Banking and Finance: Social Failure. New Horizon. Available at: http://www.newhorizon-islamicbanking.com/index.cfm?section=features&action=view&id=10699 Access Date: 1st September 2010.
Ayuso, S. and Argandona, A. (2007). Responsible Corporate Governance: Towards a Stakeholder Board of Directors?. Working Paper No. 701, University of Navarra.
Carroll, A.B. (1979). A Three-Dimensional Conceptual Model of Corporate Social Performance; Academy of Management Review, 4, 497-505.
Choudhury, M.A. and Hoque, M.Z. (2004), An Advanced Exposition of Islamic Economics and Finance, Edward Mellen Press, New York, NY.
Coffey, B.S. and J. Wang (1998), Board Diversity and Managerial Control as Predictors of Corporate Social Performance, Journal of Business Ethics, 17, 1, 1595-1603.
Context. (2006). Global Corporate Responsibility Reporting Trends. London: Context.
Dar, H. And Ahmad Azami, T. (2010). Global Islamic Finance Report. London: BMB Islamic.
Decker, O.S. (2004). Corporate Social Responsibility and Structural Changes in Financial Services. Managerial Auditing Journal, 19 (6), 712-728.
Dusuki, A.W. (2008), "What does Islam say about corporate social responsibility (CSR)?"Review of Islamic Economics, 12 (1), 5-28.
Dusuki, A.W. and Dar, H. A. (2007). Stakeholders’ Perceptions of Corporate Social Responsibility of Islamic Banks: Evidence from Malaysian Economy in Iqbal, A., Ali, S. S. and Muljawan, D. Advances in Islamic Economic and Finance, (pp. 249-277), Jeddah: IRTI.
Farook, S. (2007). On CSR of Islamic Financial Institutions. Islamic Economic Studies, 15 (1), 31-46.
Farook, S. and Lanis, R. (2007). Banking on Islam? Determinants of Corporate Social Responsibility Disclosure, in Iqbal, A., Ali, S. S. and Muljawan, D. Advances in Islamic Economic and Finance, (pp. 217-248), Jeddah: IRTI.
Freeman, R.E. (1984). Strategic Management. A Stakeholder Approach. Pitman: Boston, MA.
Garriga and Mele, (2004). Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics, 53, 51-71.
Ghazali, N. A. M. (2007). Ownership Structure and Corporate Social Responsibility Disclosure: Some Malaysian Evidence. Corporate Governance, 7(3), 251-266.
Hackston, D. & Milne, M. J. (1996). Some Determinants of Social and Environmental Disclosures in New Zealand Companies. Accounting, Auditing and Accountability Journal, 9(1), 77-108.
Haniffa, R. M. and Cooke, T. E. (2005). The Impact of Culture and Governance on Corporate Social Reporting. Journal of Accounting and Public Policy, 24(5), 391–430.
Hasan, Z. (2016). From Legalism to Value-Oriented Islamic Finance Practices, Humanomics, 32 (4): 437-458.
Hasan, Z. (2010). Corporate Governance in Islamic Financial Institutions: An Ethical Perspective, Conference on the Future of Faith in the Era of Globalization, University of Sarajevo, Bosnia and Herzegovina, 19-20th September 2010.
Hasan, Z. (2010). Demystifying the Myth of Shortage of Shari’ah Scholars, Global Islamic Finance Magazine, London, 66-67.
Ibrahim, N.A. and J.P. Angelidis (1994), Effect of Board Members' Gender on Corporate Social Responsiveness Orientation, Journal of Applied Business Research, 10 (1), 35-40.
IFC and Hawkamah. (2008). A Corporate Governance Survey of Listed Companies and Banks Across the Middle East and North Africa. IFC: Washington, United States of America.
Johnson, R.A. and D.W. Greening (1999), The Effects of Corporate Governance and Institutional Ownership Types of Corporate Social Performance, Academy of Management Journal, 42(5), 564-576.
Kassinis, G. and N. Vafeas (2002), Corporate Boards and Outside Stakeholders as Determinants of Environmental Litigation, Strategic Management Journal, 23(5), 399-414.
Kolk, A. and Pinse, J. (2010). The Integration of Corporate Governance in Corporate Social Responsibility Disclosures, Corporate Social Responsibility and Environmental Management, 17, 15–26.
McBarnett, D. (2009). Corporate Social Responsibility, Beyond Law, Through Law and For Law. Working Paper Series 2009/03. University of Edinburgh .
Usmani, M. T. (2002). An Introduction to Islamic Finance. Arab and Islamic Law Series. Kluwer Law International: Amsterdam.
WBCDS. (2002). The Business Case for Sustainable Development. Available at: http://www.wbcsd.org/web/publications/business_case_for_sd.pdf Access: 23rd July 2010.
Webb, E. (2004), An Examination of Socially Responsible Firms’ Board Structure, Journal of Management and Governance, 8 (3), 255-277.
Williams, R.J. (2003), Women on Corporate Boards of Directors and their Influence on Corporate Philanthropy, Journal of Business Ethics, 42 (1), 1-10.
Zahra, S.A., B.M. Oviatt, and K. Minyard (1993), Effects of Corporate Ownership and Board Structure on Corporate Social Responsibility and Financial Performance, Academy of Management Proceedings, pp. 336-340.
Zeegers, J. (2001). What Should be the Social Responsibility of Banks? In Mayo, E. and Guene, C. (Ed.), Banking and Social Cohesion: Alternative Responses to a Global Market (153-157), Chalbury, UK: Jon Carpenter Publishing.
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Published
2019-05-17
How to Cite
Hasan, Z. (2019). The Roles of Corporate Governance Towards Value-Oriented Islamic Finance Practices. Ulum Islamiyyah, 27(1), 1–17. https://doi.org/10.33102/uij.vol27no1.72
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