Islamic Corporate Governance In Islamic Financial Institutions

Abstract

From the previous literature, Islamic corporate governance is not something new and was brought into attention by Prophet Muhammad S.A.W., and mentioned in Al-Qur’an and AlSunnah. It is rife with principles concerning Tawhid, freedom, and responsibility, as well as Taqwa to Allah S.W.T. Islamic banks is one of the category in IFIs that has been identified to face a greater challenge in corporate governance such as fraud, corruption, financial distress, poor supervision, poor leadership and other conflicts. As stated by Hassan (2012), all these cases show that the IFIs are not immune from the crisis and failures due to governance issues and conundrums. Therefore, the main focus of this study is to meliorate the present of corporate governance principles in Islamic Financial Institutions (IFIs) Malaysia stemming from the concept of corporate governance of IFIs based on Al-Quran, Al-Sunnah and Maslahah (Maqasid Al-Sharia’) which align with the Islamic values. Thus, this research has applied qualitative as research design using case study approach to review the current principles of corporate governance in IFIs.