Abstract
Many studies show that one of the biggest challenges in Islamic banking is related to lack of proper and effective Shariah governance. By focusing on the role of Shariah Supervisory Board (SSB), this paper attempts to extract some keys on how to achieve better performance and development of Islamic banking industry by reviewing previous studies. This study was done by using literature review approach. This study concludes that increasing the size of SSB, improving higher skills and competences of SSB members, keeping the independency of SSB member as well as the need of Central Shariah Board (CSB) and shariah auditor would affect to better performance of Islamic banking.
Highlights
Islamic bank is financial institution that operated under Islamic law
Another possibility is there will be re-shifting from Islamic bank customers to the conventional bank as they feel like there are no significant differences between Islamic banks and conventional banks
That means a minimum number of Supervisory Board (SSB) members is three which is higher than what Bank Indonesia Regulation has given
Summary
Islamic bank is financial institution that operated under Islamic law. Islamic bank is following Islamic law (shariah) and holds Islamic value and paradigm. The SSB is needed to ensure the shariah compliance of product implementations and any activities related to Islamic financial institution which in this case is Islamic bank. The absence of or weak monitoring and control allows the development of new doubtful products or interest-based products under the ruse that they are Shariahcompliant products It can permit the diffusion and circulation of strange fatwas which, in turn, can threaten the credibility of Islamic which in the end would lead to the loss of trust in Islamic bank users. This paper attempts to examine the implementation of shariah governance in the Islamic banking industry focusing on the role of Shariah Supervisory Board (SSB). The method used in this paper is a literature study that contains summary, classification, and comparison of prior previous research studies
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