Shariah Compliance Research Articles

Sharia Audit and Shariah Compliance of Islamic Financial Institutions: A Bibliometric Analysis

Sharia Audit and Shariah Compliance of Islamic Financial Institutions: A Bibliometric Analysis

Analisis Implementasi Islamic Corporate Governance Pada Lembaga Keuangan Mikro Syariah Berbasis Pesantren

The purpose of this study was to determine and analyze the implementation of Islamic Corporate Governance in Islamic microfinance institutions boarding school-based namely a study at BWM Almuna Berkah Mandiri Yogyakarta in 2020. This study used a qualitative descriptive approach with Miles and Huberman analysis techniques. Data were collected through observation, interviews, and documentation. This study looks at Islamic Corporate Governance (ICG) on sharia compliance with the representation of ICG principles on the leadership of Rasulullah SAW (shiddiq, amanah, tabligh, fathanah), fair and Shariah Compliance. The results of this study indicate that the implementation of Islamic corporate governance at the Islamic Microfinance Institution of the Micro Waqf Bank (LKMS BWM) Almuna Berkah Mandiri Yogyakarta in 2020 has not been implemented as a whole. When viewed using six indicators of Islamic corporate governance, LKMS BWM Almuna Berkah Mandiri has implemented ICG on the indicators of trust (trustworthiness/accountability), tabligh (delivering truth/responsibility), and fairness (fairness). LKMS BWM Almuna has not fully implemented ICG on indicators of shiddiq, fathanah, and shariah compliance in institutional governance, namely in delivering information to stakeholders, in terms of work experience (educational level) and HR expertise as well as auditing as needed in BWM LKMS governance.

Usaha dan Pendekatan Pematuhan Syariah dalam Organisasi Angkatan Tentera Malaysia oleh Kor Agama Angkatan Tentera (KAGAT)

The Inculcation of Islamic Values Policy is a policy introduced by the Government of Malaysia in 1985 by the Prime Minister, Tun Mahathir Mohamad. This policy is a continuation of the efforts of the Malaysian government that have been accomplished such as the establishment of various organizations based on Islamic values. In line with that, the Malaysian Armed Forces organization is also working towards the application of values in Islam in the organization to erode the influence of the British military tradition which is contrary to the Malay and Islamic traditions. The establishment of the Religious Corps of the Malaysian Armed Forces in 1985 was one of the efforts toward Syariah compliance in the Malaysian Armed Forces. The objective of this study is to explore KAGAT’s efforts to meet shariah compliance requirements in ATM organizations. In addition, the objective of this study is to examine the approaches implemented to implement Shariah compliance in ATMs. This qualitative study uses library research methods and document review as data collection methods. While the thematic analysis method is used to analyze the data. The research findings show that Shariah compliance efforts have been implemented effectively using appropriate approaches. Shariah compliance has increased and brought a positive impact to the success of KAGAT in the implementation of dakwah more comprehensively and continuously to build a competent Malaysian Armed Forces with a strong combat force and a strong spirit. This study fills the gaps in the literature regarding aspects of Shariah compliance and methods used in the Malaysian Armed Forces because such studies are still so barely explored by past researchers.

Guests’ Acceptance and Loyalty on Shariah Compliant Hotel Practices at Five-Star Rated Hotels in Malaysia

Guests’ Acceptance and Loyalty on Shariah Compliant Hotel Practices at Five-Star Rated Hotels in Malaysia

Contemporary Shariah and Legal Pertinent Issues in Cash Waqf Mechanism using Peer To Peer (P2p) Platform in Indonesian Islamic Economics

The remarkable growth of financial technology wreaks significant impact to the liquidity of Islamic financial industry. Cash waqf now is perceived as the right instrument to ameliorate the issue of liquidity amid modest effort of financial industry in Indonesia. Cash waqf using P2P (Peer to Peer) platform model now is becoming the untapped potential of business beside social responsibility. However, there are some issues as cash waqf integrated with P2P platform that might lead to another phenomenon of shariah compliance in financial technology. In view of this backdrop, this paper aims to unveil the issue of shariah compliance in contract that used to disburse cash waqf funds using P2P platform model. Second, this paper also deciphers some legal issues that might occur that contrary to the existing law. The paper finds that since the existing regulation including Fatwa considered as general, there is possibility that the practice of P2P shariah deviate from Shariah tenet and wreak some legal issues. In the event of default payment, late charges and early settlement not clearly regulated and no standard. This paper also finds that no such governance standard, risk management, shariah compliance and code of ethics oThe contract inherent in this platform model shall be in line with the tenet of Shariah principles and not only comply with existing regulation. This paper implies that more cash waqf will be generated through this platform model as it is easier and more practical. In addition, financial industry will adhere strictly to shariah compliance aspect as their concern.

Analisis Kepatuhan Syariah (Shariah Compliance) Terhadap Produk Tabungan Marhamah dengan Akad Mudharabah pada Bank Sumut Kantor Cabang Syariah Medan

Savings Marhamah is one of the popular savings among customers of the Islamic bank of North Sumatra, by using a profit sharing contract or mudharabah, a problem arises that the author wants to know, What is the form of implementation of compliance with sharia principles in the savings product of Marhamah Bank of North Sumatra Sharia Branch Office Medan?, The author wants to compare whether the mudharabah mechanism applied to this Marhamah savings product is with the sharia principles that exist in the MUI DSN or does this Marhamah savings product have sharia compliance? The data collection technique is qualitative with descriptive method. This qualitative descriptive research provides a systematic, accurate, and accurate description of the implementation of shariah compliance as seen from the products of Bank Sumut, Medan Sharia Branch Office.

Impact of board attributes and managerial ownership on cash holdings: empirical evidence using GMM and quantile regressions

Purpose The purpose of this study is to examine the impact of board attributes and managerial ownership on cash holdings. Design/methodology/approach The present study examines a sample of 70 listed firms in Saudi Arabia observed during the period stretching from 2006 to 2016. To test the hypotheses, the authors used generalized method of moments and quantile regressions. Findings The empirical results reveal that corporate governance (CG) mechanisms are inefficient in the Saudi context. In fact, the authors found that board size, board independence, duality and managerial ownership impact positively and significantly cash holdings. Additionally, quantile regressions confirm the results that at certain thresholds, CG mechanisms are not efficient in protecting shareholders’ interests. Shariah compliance is found to moderate negatively and significantly the studied relationship. Originality/value This study helps to not only clarify and help decision-makers to see the importance of corporate cash management but also to identify the limits of the CG mechanisms put in place.

PENGARUH KEUNTUNGAN RELATIF, FITUR LAYANAN, RISIKO, DAN KEPATUHAN SYARIAH TERHADAP MINAT TRANSAKSI MENGGUNAKAN BSI MOBILE DI KOTA BANDA ACEH

This study aims to see and analyze the effects of relative advantage, service features, risk, and shariah compliance on interesting transactions of the customers that use BSI mobile. The object of this study is Bank Syariah Indonesia customers in Banda Aceh city who use BSI mobile. Samples were taken by purposive sampling method. There are 100 samples of the data which became the object to be researched. This research is quantitative research with primarily data obtained by distributing questionnaires of interviews. The results show that relative advantages, service features, risk and sharia compliance give an effect to the user of BSI mobile simultaneously. The results of this research also show and give positive effects and are significant for the customers interest in using BSI mobile, whereas the risk dont give effects for the customers interest in using BSI mobile.

A Need of Shariah Compliant Model of 3D Bioprinting

One of the credible inventions is 3D Bioprinting or organ printing which uses layer by layer fabrication manner and is an emerging and developing technology offered by the research industry and can help the humanity in certain areas of life e.g., health, food, etc. The technology has been found beneficial in wide spectrum within the medical industry in fighting the shortage of organ and tissues donations. It is also helpful for the pharmaceuticals for determining effectiveness of new drugs and the food industry players to develop new type of edible meat for humans’ consumption. However, behind all these benefits, there are unresolved issues that need be discussed critically and addressed properly within the ethics, law and orders of Islamic worldview. This study aims to indentify the Sharī‘ah related issues raised consequent upon the invention of 3D bioprinting. The study uses data collection from scholars’ writings, academic journals, and Islamic fatwa related to bioethics. The data are analysed thematically. The results show that there is a loophole in bioethics research on Sharī‘ah compliant guidelines for the Muslims users with regards to bioprinting usage. It is suggested for the experts to do thorough research on Sharī‘ah compliant guidelines of bioprinting to be the benchmark guideline for authorities such as JAKIM in Malaysia and other authorities such as the Ministry of Health in treating the Muslim patients.
 Keywords:3D Bioprinting, Ethical and Legal Issues, Organ Printing, Sharī ‘ah Compliance.

DO INVESTORS OF ISLAMIC EQUITY FUNDS FOLLOW WARREN BUFFET’S ADVICE? A REGRESSION ASSESSMENT

Researchers have doubted Islamic funds’ ability to provide promising financial returns due to the shariah screening procedures. Despite its popularity, Islamic funds are still in doubt to generate attractive returns. Survival of Islamic funds is highly contingent on their capacity to foresee Shariah compliance opportunities in economic shifts. Investors defer fund withdrawal of the worst-performing funds and anticipate the manager will adjust the fund's investing strategy for a future with higher yields. Thus, this paper aims to investigate investors’ reactions to the Islamic equity fund results (IEs) according to the opportunity motive of Warren Buffet. This is accomplished by evaluating the relationship between fund flow and performance. This allows us to determine whether investors behave toward the greatest and worst-performing funds by transferring cash into or out of the funds. This study uses panel data analysis to investigate 134 IEs from 2007 through 2019. The findings revealed that the link between fund flow and performance of IEs is incompatible with the asymmetric relationship, implying that the cash outflow for poorly performing funds declined. In contrast, cash inflow fell for funds that performed the best. Consistent with Warren Buffet’s advice. Keywords: Islamic equity funds; fund flow; fund performance; Warren Buffet

SHARI’A COMPLIANCE PRINCIPLES IN FINANCIAL TECHNOLOGY

Currently in Indonesia, financial technology (fintech) services have developed rapidly. The development of fintech in Indonesia has been responded positively by several regulations issued by the Financial Services Authority (OJK) and Bank Indonesia (BI). In addition to conventional fintech, sharia fintech in Indonesia has also begun to develop significantly, especially since the DSN-MUI fatwa on Sharia Information Technology-Based Financing Services (Fatwa No.117/DSN-MUI/IX/2018). Although sharia fintech has begun to develop, OJK has not fully accommodated the DSN-MUI Fatwa as a binding regulation. The DPS institution as a supervisor for Islamic financial institution entities as well as for start-ups such as fintech that operates according to sharia must follow the regulations that have been decided by the DSN-MUI so that these entities can operate in sharia and this is part of compliance with sharia compliance). This study investigates the Shariah compliance status of financial technology services. The research method used is the library research method with a literature review approach. The results of the study show that currently fintech operating in sharia still needs stronger legal instruments so that compliance with sharia is truly carried out comprehensively and not only applies a kind of label that is run by sharia, so that the existence of fintech and customer trust (consumers can be maintained.

Malaysian Hotel Certification in the Islamic Tourism Industry

Shariah compliant hotel is an essential product in Islamic tourism where many activities could be available there. Thus, certification plays a significant role as a symbol of commitment for the hotel operators to comply with the Shariah principles. By using qualitative methodology, this study aims to explore the Malaysian certification bodies that offer Islamic related certificates to the hotel. There is no standardisation on the certification requirements and approach among the certification bodies to certify the Shariah compliant hotel. Thus, the government should introduce a mechanism to monitor certification to the Shariah compliant hotel. Keywords: Shariah Compliant Hotel; Islamic Tourism; Certification Scheme; Halal Standard eISSN: 2398-4287 © 2022. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v7iSI7%20(Special%20Issue).3811

The Influence of Intellectual Capital and Shariah Compliance on Social Performance (Study Empirical on Islamic Banks in 2018-2020)

The purpose of this study was to determine the effect of Intellectual Capital and Shariah Compliance on Social Performance. The sample of this research is in the form of financial statements of Islamic banks on The Financial Services Authority for the period 2018 - 2020 for 3 years. The sampling technique used is purposive sampling technique so that a sample of 13 companies is obtained that has met the criteria. The data analysis technique used is multiple regression with the help of the SPSS program. The results of this study indicate that Intellectual Capital and Shariah Compliance have no partial effect on social performance.

Analisis Kepatuhan Syariah (Shariah Compliance) Produk Kredit Perumahan Rakyat (KPR) dengan Akad Murabahah pada Bank Sumut Kantor Cabang Syariah Medan

This research is entitled Study of Sharia Compliance in Public Housing Loan Products (KPR) with Murabahah Agreement at Bank Sumut, Medan Sharia Branch Office. Shariah Compliance can simply be interpreted as a form of obedience carried out by Islamic banks in fulfilling existing sharia principles in all aspects of their operational activities. This is the difference between Islamic banks and conventional banks.People's Housing Credit (KPR) is a facility provided by banks to customers who wish to have a place to live (home). In general, mortgages in Islamic banks use a lot of murabahah contracts. Murabahah itself means a sale and purchase agreement made between two parties, namely the bank and the customer. Which is where the Islamic bank will buy the house that the customer wants and then sell it to the customer at a cost plus a profit margin that has been mutually agreed upon.The method used in this research is descriptive qualitative. Data obtained from the results of observations and documentation on the bank directly. This study aims to see how to provide Murabahah mortgage financing and the extent of sharia compliance with Murabahah mortgage products at Bank Sumut Syariah Medan Branch Office.

Shariah compliance and stock price synchronicity: evidence from India

PurposeThis paper aims to document the effect of shariah compliance on stock price synchronicity.Design/methodology/approachThis paper uses the data of non-financial firms from India and various estimation procedures (pooled OLS and instrument variable regression) to test the arguments presented in this paper. The time period of the study ranges between 2000 and 2019.FindingsThe results show that shariah-compliant firms have significantly higher levels of synchronicity than non-compliant firms. The findings hold after comprehensive inclusion of relevant controls and to a number of sensitivity tests. The authors attribute this result to the unique financial characteristics (lower levels of leverage, liquidity and cash) of shariah-compliant firms. The paper argues that these characteristics are related to better information environment which is responsible for higher levels of synchronicity. The paper also shows that the difference in the synchronicity levels of the two groups is less pronounced for those shariah-compliant firms that have relatively high levels of leverage and cash ratios.Originality/valueThe authors believe that this is an initial attempt to document the impact of shariah compliance on stock price synchronicity.

Do CEO Overconfidence and International Diversification Strategy affect the Capital Structure of Shariah Compliant Companies?

Do CEO Overconfidence and International Diversification Strategy affect the Capital Structure of Shariah Compliant Companies?

Hisse Senedi Şer‘i İzleme Faaliyetlerinde Kullanılan Eşik Değerlere Dair Eleştirel Bir İnceleme

Capital markets represent the second main application area of Islamic finance after the banking sector. The most important instrument traded in these markets is stocks. The character of companies is important on the legitimacy (shariah compliance) of investing in stocks. The fact that the companies with a completely Shariah compliant structure are few in number brings about investing in mixed companies that carry out Shariah non-compliant activities even though their main activity is legitimate. Depending on this necessity, companies are allowed to carry out financial activities that do not comply with Shariah principles to a certain extent. In this context, thresholds are used within the scope of Shariah screening to determine the level of non-compliant elements to Shariah in the company. There are two different approaches to determining thresholds; the minority-majority-centered approach and the necessity-centered approach. The first approach uses Shar'i evidence showing the less or more borderline when setting thresholds for all analysis of Shariah screening. The necessity-centered approach, on the other hand, focuses on determining the amount of necessity based on market data. Both methods contain methodological problems in the threshold determination processes. This study aims to reveal the problems of both methods and to propose the sectoral necessity-centered method as an alternative.

Capital structure dynamics of Shariah-compliant vs noncompliant firms: evidence from Pakistan

PurposeThis study aims to compare capital structure determinants' effect on the leverage levels of Shariah-compliant (SC) and noncompliant (NC) firms in Pakistan. This study also estimates and compares the capital structure adjustment speed for both firm types.Design/methodology/approachBased on the Karachi Meezan Index screening criterion, a balanced panel of 117 SC and 68 NC firms listed on the Pakistan Stock Exchange from 2008 to 2018 was constituted. This study used the generalized method of moments to identify the significant determinants of capital structure and estimate the speed of adjustment. In addition, the F-test was used to check whether the effect of the determinants on the leverage is same for SC and non-SC firms.FindingsThe authors found that different determinants affect both firm types' leverage levels (book and market) differently. The authors also found that the adjustment speed of SC firms toward their target leverage ratio is slower than their NC peers. Lastly, significant variation was observed in the results under different screening criteria.Research limitations/implicationsThis study fills the literature gap by providing a comprehensive comparison of the capital structure decisions of the SC and non-SC firms. Because this study is limited to Pakistan, generalizability would be an issue.Practical implicationsThis study will guide the management of SC and non-SC firms about which factors are reliably important in choosing their capital structure. The findings also call for bringing harmony in the different Shariah screening criteria being in practice.Originality/valueTo the best of the authors’ knowledge, this is the first comparative study that identifies the significant capital structure determinants for SC and NC firms and investigates their effect on the leverage of both firm types. By testing joint hypotheses of same relationship, this study seeks to determine if, because of Shariah restrictions, the capital structure determinants of SC firms are similar to NC firms or they exhibit different behavior. The authors also repeat their analysis using other prominent screening criteria to assess the consistency of their results.

Human Governance Index of Manufacturing Sector of Shariah Compliant Companies in Malaysia: A Preliminary Analysis

Human Governance refers to the governors’ commitment to improve employees’ values and ethical behaviour in the organization. Humans are capital asset and key driver to a successful organisation. The objectives of the study are to explain the development of human governance index and discuss the findings of human governance index when applied to 68 Shariah-compliant companies in the manufacturing sector. Previous study used primary and secondary data. Thus, this study will combine the indices of Human Governance from previous study and will develop a more comprehensive checklist using secondary data. Human Governance Index of this study comprises 37 items which are made up of four (4) main components which are (1) BOD Leadership - which is measured by i) BOD Job Experience Index, (ii) BOD Educational Background Index, (iii) BOD Educational Level Index, (iv) BOD Age Index, (v) BOD Gender Diversity Index; (2) Level of Integrity Index; (3) BOD Quantity of Training Index; and (4) Quality of Internal Control System Index. The index has been validated by panel experts and inter-rater consistency was also conducted. The index was then used to measure the Human Governance Index of 68 Shariah-compliant companies’ annual reports for the year 2019. 68 Shariah-compliant companies are from manufacturing companies which comprise 25 consumer products, 3 healthcare, and 40 industrial products. The results of this study revealed that consumer product sector has the highest items compared to industrial product and healthcare sectors. BOD job experience index has the highest mean of 92.9% indicates that BOD has more than 10 years’ experience and BOD gender diversity index has the lowest mean of 17.6% which comprises female. Human governance Index can be used to assist companies to improve their human capital who are important assets to the company and have been proven to increase performance of companies if they are better managed.

A Study of Awareness of Islamic Banking in Oman

Research Objective: The Islamic Banking came in existence in the year 2012 in Oman. Oman was the last country of GCC countries to implement Islamic Banking. Although the Shariah compliance concept is not new, it has not developed as significantly as other financial services in Oman. The reason behind this is the lack of understanding of terms and operations of Islamic banks. The reason behind this is a lack of understanding of Islamic banks' terms and operations. This survey has revealed the awareness and understanding of Salalah people regarding the services and activities of Islamic banking. Design/methodology/approach: In this study descriptive statistics, factor analysis and logistic regression approaches to analyze the expectations of customers regarding Islamic banking in Oman. In this research, a sample of 102 people that includes people of different age groups, different profession and occupation were selected. They were mainly the customers of the Islamic bank. The religious commitments of customers, understanding of Islamic banking; products are the variables that have been evaluated. Findings: The findings show that Islamic banking awareness is very low among Omanis, despite the fact that the perceived value of Islamic banking is significant. The study also identifies some of the challenging issues for Banking system in Oman, such as a lack of understanding about Islamic banking, competitive pressures from conventional banking, and non-Muslims' unwillingness to adopt Islamic banking. Among all the participants, the knowledge and use of Islamic banking products by consumers is very weak. Almost all customers accept that interest in Islam is forbidden, but they consider most of the Islamic banks are not to be consistent with Shariah. The findings suggest that the key factors of Islamic banking are religious commitment, perception of Islamic banking. Research limitations/implications – Given the fact that this study uses a relatively small sample, limiting to only one city of the country generalization of the findings needs to be done with caution.
 
 Received: 7 March 2022 / Accepted: 12 May 2022 / Published: 5 July 2022