An Analytical Commentary on Shariah Governance in Islamic Financial Institutions Across Multiple Countries.

Abstract

This commentary provides a comprehensive overview of Shariah governance in Islamic financial institutions (IFIs). This piece draws on a literature review of various relevant studies and their key findings and observations. It emphasises the importance of implementing a robust Shariah governance framework in IFIs and argues that the current Shariah governance frameworks are complicated, resulting in each country adopting a different approach. The commentary highlights that the existence of different Shariah governance approaches can lead to inconsistencies in Shariah rulings, potentially undermining the credibility of IFIs and eroding consumer confidence.Additionally, the study reveals that certain IFIs have failed due to a deficient Shariah governance system. However, the commentary argues that the collapse of an institution does not necessarily indicate a weak Shariah governance framework. The framework itself remains robust, but the problem lies in how the Shariah supervisory board (SSB) interprets and makes decisions. As a result, a standardised Shariah governance framework could help address some of the inconsistencies contributing to these issues. This commentary is valuable for both academics and non-academics who are interested in understanding Shariah governance.