Sharī‘a Incorporated: Figuration, Performativity, and Religious Contestations over Corporate Power

PurposeThis study aims to find the determinants of internal and external customer satisfaction of Islamic banks of Pakistan through service quality indicators that are assurance, reliance, empathy, tangibility, responsiveness. Compliance has also been added as a determinant of customer satisfaction. In this study, customers are divided into two groups, internal customers are those who are an employee in the Islamic bank and also an account holder. While external customers are account holders only in Islamic banks of Pakistan.Design/methodology/approachIn this study, a quantitative research approach is used for analyzing the behavior of internal and external customers of Islamic banks in Pakistan. The instrument which is used to analyze the study’s data, is a structured five-point Likert-scale questionnaire. The structural model was analyzed with the help of the partial least squares structural equation modeling approach.FindingsThis study concluded that internal customers of Islamic banking are well aware and have full information and their level of satisfaction is positive toward the bank’s services. While external customers feel satisfied while using the Islamic banking services in Pakistan. Service quality indicators are positively and significantly related to customer satisfaction in the external customer model. On the other hand, some of the indicators are not showing a significant impact on the internal customer multi-group analysis shows a difference of coefficients are insignificant between internal and external customers.Practical implicationsThis study helps policymakers, to understand the behavior of internal and external customers of Islamic banking in Pakistan for creating favorable policies for an interest-free banking service.Originality/valueThis research study provides an analysis of the customer satisfaction of Islamic banks in Pakistan by dividing Islamic bank customers into two groups (internal and external customers). The purpose for dividing Islamic bank customers into two groups is that this study wants to highlight that external customer’s perception is the same as internal customers or not? Before this study, it is difficult to find single research on this topic, whereas only one study is find-out on the factors that affect internet banking adoption among internal and external customers.

PurposeThe aim of this study is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon, and its survival depends on the availability, affordability and awareness. This paper attempts to fill the gap in the literature by exploring the perceptions of consumers and bankers in an attempt to gain insights so that the availability of products and awareness can be increased.Design/methodology/approachThe study uses a regression model by using perception as a dependent variable and awareness, knowledge and religious motivation as independent variables. Primary data is collected using 150 questionnaires distributed amongst finance students in several universities and employees of Islamic banks in the Khyber Pakhtunkhwa (KPK) Province of Pakistan.FindingsThe findings reveal that overall consumers’ perception is positive about Islamic banking and finance in Pakistan. Statistical analysis shows that awareness, knowledge and religiosity level have a positive influence on the perception of consumers about Islamic financing products and services in Pakistan. To improve the awareness and understanding, Islamic banks could make better marketing strategies and could increase their presence by mosque visits and conferences. Cooperation between the industry and scholars could help in providing more innovative products to the consumers.Research limitations/implicationsThere has been a limited amount of work carried out on the perceptions of consumers about Islamic banking in Pakistan. The present study represents the start of a larger context for examining Islamic banking practices in Pakistan. The findings of the study can be used as a reference in future research projects in the areas of perceptions and awareness.Originality/valueLittle research has been conducted to study this problem from the perspectives of consumers and Islamic banking employees. Most of the research associated with Islamic banks fails to pay attention to these stakeholder groups in one study.

The purpose of this study is to assess the behavior of Islamic and conventional banks towards the improving risk management. This study is focused on survey and comparative of risk management practiced by Islamic and conventional banks in Pakistan. The study also examines the adequacy level of risk management and managerial practices by these banks. Five types of risks faced by both Islamic and conventional banks including market risk, liquidity risk, credit risk, operational risk and risk management practices have been taken into the scope of this study. In order to assess the behavior of these banks towards the attentiveness of minimization of operational risks and following the aforementioned tools, exploratory approach has been adopted by developing a questionnaire for data collection. For this purpose, the concerned managerial level employees of 5 Islamic and 5 conventional banks have been selected. By the analysis of data collected, it is concluded thatcompared to conventional banks, Islamic banks in Pakistan place a greater emphasis on risk management practices to reduce operational risks.However, conventional banksare more focused on credit risk, liquidity risk and risk management practices than Islamic banks while the focus on risk management practice is shared by both types of banks. A conducting of survey and comparative analysis of risk management practices has important implications for improving organizational risk resilience, guiding policy and regulatory decisions, fostering best practices, and promoting overall market stability. Organizations can use the insights to refine their risk management processes, while regulators and policymakers can leverage the findings to enhance industry standards and safeguard public interests.

This study aims to identify the barriers to adopting Islamic Banking (IB) in Pakistan. This study is focused on three categories of banking customers: IB users, non-users, and those who use both IB and Convemtional Banking (CB). We utilize qualitative methods include in-depth interviews with IB Managers, scholars, and focus groups of the three consumers types. Findings revealed several barriers to broad-based adoption of Islamic banking in Pakistan such as: Lack of Trust, high adoption costs, perception that IB and CB are similar, lower returns, the state bank of Pakistan’s reliance on CB methods, and financial literacy gaps. This study stands out for its inclusion of focus groups with both users and non-users, as well as expert interviews, providing insights beyond literature review. Additionally, it offers user and non-user profiles valuable for customer segmentation and targeting.

This study comparatively analyses the financial stability of Islamic and conventional banks in Pakistan. Using data of 29 conventional and 9 Islamic banks over 18 years, the study first estimates bank competition and stability using Lerner index and Z-Score, respectively. Generalized least squares regression is used and the coefficients are estimated by using random-effects estimator. Results of the mean comparison show that Islamic banks carry more market power (less competition) and are more stable compared to their conventional counterparts. Results of a panel regression show that competition positively affects the stability of the banking sector and this effect is higher for Islamic banks due to their market power. Results also show that bank stability in Pakistan was reduced during global crisis period; however, presence of Islamic banks contributes to the stability even during crisis. Finally, this study supports the competition-stability hypothesis for Islamic banking in Pakistan. Recommendations are given at the end.

The study explores how financial performance (FP) affects the corporate social responsibility (CSR) of the banking sector of Pakistan. Further, it also elaborates the comparison between FP and CSR of Islamic and conventional banks of Pakistan. The study is based on the annual reports of banks listed at Pakistan Stock Exchange (PSE) for the years 2010-2016. The study used several panel data diagnostic tests and three regression models to check the relationship between FP and CSR of Islamic and conventional banks of Pakistan, while taking leverage and size as control variables. The results indicate that in case of conventional banks the relationship between ROE and CSR is negative. Here, the results are consistent with the agency theory which states that investment in CSR related activities is a waste of resources. While return on asset (ROA) is depicting negative and insignificant relationship with CSR, which depicts that FP does not have any impact on the investment in CSR initiatives. In the case of Islamic banks, the relationship between return on equity (ROE) and CSR is positive and significant. Here, the results support social contract and stakeholder theories. The research has important practical consequences that will help the banking industry managers to adopt optimal investment strategies about CSR related activities. The study provides guidelines to conventional banks to invest more in CSR in the same way Islamic banks are doing. The findings of the study lay some foundations upon which a more detailed analysis of CSR of banks could be based.

Islamic banks are striving to capture the maximum number of customers to compete with conventional banks by providing a large number of products as an alternative for interest based products. There is a clear difference between operations/products offered by Islamic and conventional banks. Islamic banks are offering interest free products according to Shariah principles to promote business and trade in the country. This study presents an overview of operations and products offered by Islamic banks especially in Pakistan. Islamic banks provide a variety of products according to principles of Shariah to cope with the challenges of the recent age. These products may be categorized as short-term, medium-term and long-term according to their specific characteristics. It also reflects a brief picture regarding performance of Islamic banks in Pakistan since 2002. This study contributes a lot towards existing literature by beautiful reflection of operations and products of Islamic banks as bank-customer relationship for provision of quality services. It also presents the popularity and progressive products offered by Islamic banks in Pakistan. It could enhance the understanding of customers, bankers, policy makers and academicians. This study provides an insight regarding products/operations of Islamic bank that enables the researchers, academicians and policy makers to explore the ways to realize the potential benefits of Islamic banking. Key words: Islamic banking, operations, products, Pakistan.

PurposeIslamic banks provide an alternative financial system based on Sharia’h (Islamic law). However, critics argue that operation at Islamic banks is violating Sharia’h particularly in terms of provision of interest free services, risk sharing and legal contract. The purpose of this paper is to empirically evaluate the Sharia’h practice at Islamic banks in Pakistan by considering some basic principles of Sharia’h.Design/methodology/approachPrimary data are collected from 63 branches of Islamic banks in Pakistan. Questionnaire is used as an instrument. The study uses structural equation modeling that includes confirmatory factor analysis and regression analysis. Data are codified and analyzed using SPSS and Amos.FindingsThis study finds that Islamic banks are providing interest free services, ensuring that transactions and contracts offered by Islamic banks are legal and offering conflict-free environment to customers. In contrast, estimated results expose that Islamic banks are not sharing risk and Sharia’h supervisory board is not performing its role perfectly. Similarly, it is found that organization and distribution of zakat and qard-ul-hassan are weak at Islamic banks.Research limitations/implicationsData are collected from Islamabad federal capital of Pakistan that hold just 5 per cent share of Islamic banking industry. This small share may not provide true picture of Islamic banking sector.Practical implicationsTo ensure risk sharing, Islamic banking industry must consider the development of new modes of financing and innovation of more products based on Sharia’h. State Bank of Pakistan should ensure separate regulatory framework that enable Islamic banks to provide qard-ul-hassan, organize and allocate zakat.Originality/valueThis paper discusses the perception of bankers, who are actually the executors, about Shariah’s practices at Islamic banks in Pakistan. There are not many discussions on this topic that could be found, and hence this could be considered as a significant contribution by this paper to the existing literature of Islamic finance.

Islamic banking is achieving marvelous growth throughout the world with massive pace. As a Muslim country, Pakistan is also trying to establish this banking system. For this, several steps have been taken in past due to which, at present, Islamic banking system is getting its strength. Similarly, the future of Islamic banking is also very bright in Pakistan.Conventional banking in Pakistan has very deep roots since its independence in 1947. An experiment was done in 1950s to convert conventional banking system to Islamic but it failed due to several reasons. In the light of the decision given by Supreme Court and Federal Sharia’h Court in 1992 to convert the conventional banking system into Islamic, the first Islamic bank, Meezan Bank was established in 2002. Till today, there are 5 full-fledged Islamic banks working in the country having 767 branches. 15 conventional banks are also providing Islamic banking services through their 451 branches throughout the country along with 96 sub-branches by Islamic and conventional banks. Therefore, total network of Islamic banking branches is 1314, having total assets of 1016 Billion Pak Rupees and total deposits of 872 Billion Pak Rupees. Within a period of 12 years, Islamic banking has achieved a growth rate of 15 to 20 percent and captured 10% share of total banking network of the country (SBP). These milestones reflect that at present, Islamic banking is flying high by achieving extraordinary growth in the country. Government is also determined to convert whole conventional banking system into Islamic. Therefore, the future of Islamic banking in Pakistan is very bright and it will achieve its heights in coming years.

This paper addresses the need for reform in AAOIFI standards on murabaha financing, providing a legal analysis and examining compliance by Islamic banks in Pakistan with AAOIFI Shariah Standard No. (8). Through qualitative research involving face-to-face interviews and content analysis, primary data was collected and analyzed using NVivo software. The findings reveal that Islamic banks in Pakistan do not fully comply with AAOIFI Shariah Standard No. (8), specifically regarding the arrangement fee outlined in clause 2/4/4. Additionally, a contradiction is identified between Shariah Standard No. (24) (clause: 7(1)) and Shariah Standard No. (8) (clause: 2/4/4), as the former permits the charging of an arrangement fee while the latter does not. It’s important to note that this study focuses exclusively on murabaha financing as a debt-based product of Islamic banks and is conducted in Karachi, the financial capital of Pakistan, with respondents including Shariah advisors, assistant Shariah advisors, and bank managers from Islamic banks. The findings contribute to the significance of standardizing the international Islamic banking system and recommend reforms in AAOIFI Standards to foster a harmonized and uniform practice among Islamic banks in Pakistan. This research paper provides valuable insights into contemporary Islamic banking practices, assisting the State Bank of Pakistan in evaluating AAOIFI compliance. Additionally, it helps shape the public’s perception of Islamic banks’ adherence to Islamic principles and offers potential guidance for future research in various jurisdictions.

The relationship between corporate governance characteristics and Corporate Social Responsibility (CSR) disclosure was analyzed empirically in this study. For this purpose, data was collected from Islamic banks in Pakistan for the time period spanning from 2009-2016. Regression analysis was used along with descriptive statistics, correlation analysis and incremental regression analysis. The study found significant findings in favor of hypotheses regarding CEO duality, profitability and board independence for Islamic banks. All the empirical findings concluded that the determinants of corporate governance have a momentous influence on the reporting of CSR of Islamic banks in Pakistan. The outcomes of this research are valuable for policy makers and managers for the evaluation of the existing principles of corporate governance structure by considering its influence on CSR disclosure in the Islamic banking sector.

The impact of credit risk (CR) on bank-specific factors (BSF’s) and banks in the event of conventional and Islamic banks of Pakistan is an essential motivation behind this learning. These banks are chosen by their value commitment. The financial explanation investigation of chosen Islamic and conventional banks is contemplated from 2007 to 2017. Relapse examination of non-performing loan (NPL) proportion and Z-Score is utilized to discover the connections of BSF’s on chosen banks. The Islamic banking system consists of (return on equity (ROE), ROA, liquidity, spread and bank size) having a significant relationship toward credit risk. Therefore, the impact of the Z-score is less for Islamic banks relatively compared to conventional banks. The increased risk of bank debt reflects a strong NPL. In this examination bank, certain factors, for instance, efficiency, return on assets (ROA) and bank dimension, have a significant liaison through credit card risk in the conventional selected banking system, and this process affects overall banking performance. These findings provide valuable insights for policymakers, regulators, and banking professionals to manage credit risk effectively in the context of Pakistan's banking system. The originality of this study lies in its focus on the comparison between conventional and Islamic banks in Pakistan, which has yet to be extensively explored in the literature.

This paper investigates the X-efficiency of Islamic banks in Pakistan from 2007 to 2020. Researchers aim to determine the efficiency of Islamic banks with respect to the utilization of available resources. The efficiency of the banking sector has been under scrutiny in recent years due to increased competition, deregulation, global financial crises, and the advent of Islamic banking. The study investigates the data of five functional Islamic banks in Pakistan. This study employs the Data Envelopment Analysis (DEA) method to evaluate the efficiency of the Islamic banking sector. The input and output variables are specified using an intermediation approach, in accordance with standard practices. The results indicate that Islamic banks in Pakistan are, on average, relevantly efficient. We found that among the five Islamic banks in Pakistan, the Meezan Bank has the greatest average cost, technical efficiency, and allocative efficiency. It becomes clear that the bank's size and longevity are the primary contributors to its top-tier performance and efficiency metrics. The study's results provide credence to the idea of economies of scale by showing that scale efficiency improves with bank size. These results call for regulatory considerations that acknowledge the influence of bank size on efficiency, suggesting that policies promoting growth might inadvertently enhance the sector's efficiency levels.

Islamic banking has been developing and expanding its network across Pakistan. The study aimed at evaluation of the selection criteria for Islamic banking in Pakistan. To get this aim, pragmatic research design was incorporated. More specifically, qualitative and quantitative study methods were used in the study to explore the selection criteria for Islamic banking in Pakistan. A close ended questionnaire was incorporated to collect data from a sample of 300 customers of Islamic banks in Pakistan. The sample generated 81% response rate. It was found that rate of return, Islamic teachings and bank's reputation influence behavior of customers towards Islamic banks. Specifically, it was found that bank's reputation, rate of return and Islamic teachings strongly influence the general behavior of customers towards Islamic banks. Finally, it has been recommended that marketers of Islamic banks need to promote their good reputation to attract new customers. They can also promote the religious traditions in their advertisements to attract customers who are motivated to avail interest free banking services.

This paper investigates Excess Liquidity problem faced by the Islamic Banking Industry of Pakistan because the Shariah Compliant Money and Capital Markets are in infancy stage in Pakistan. Demand for Shariah Compliant Sovereign Securities is very high, while the supply is very restricted compared to Sovereign Securities available to Conventional Banks in Pakistan. The purpose of this research is to review the impact of Excess Liquidity on Profitability of Islamic Banks vs. Conventional Banks in Pakistan. The research is based on secondary data of Islamic & Conventional Banks for a period of 10 years ranging from 2008 to 2017. The study uses Descriptive and Inferential Statistics based on Independent t-test & GLM Mediation Model analysis. The findings of this research is that Islamic Banks in Pakistan have positive Excess Liquidity while Conventional Banks have negative Excess Liquidity. Profitability of Islamic Banks in Pakistan is low as compared to their Conventional Counterpart. The Solvency, measured through Total Asset to Total Equity (TATER) is found to differ significantly for Islamic Banks than Conventional Banks. Based on Mediation Analysis, it may be concluded that: (1) The liquidity copiousness in Pakistani Islamic Banks in the shape of Excess Liquidity does have a direct impact on the Profitability of Islamic Banks; whereas in case of Conventional Bank of Pakistan the comparable Liquidity does have direct impact on their Profitability; (2) In Islamic Bank, the Solvency mediates the relationship between Excess Liquidity & Profitability. The Solvency in conventional banks also mediates the relationship between comparable Liquidity and Profitability