Enhancing the Implementation of Shariah Review Practices in Islamic Banks

Abstract

Research aim: BThe aim of the present study is to understand how Shariah review practices
are being implemented by gathering the perceptions of Shariah officers at different Islamic
banks (IBs). This is done through analysis of similarities and differences of Shariah review
practices across different IBs.
Design/ Methodology/ Approach: Data was gathered through semi-structured interviews
with six Shariah officers, including managers and executive levels from five different IBs.
Research finding: Utilising an institutional perspective, the findings suggest that coercive
isomorphism through comprehensive guidelines on Shariah review practices promote
consistent implementation of Shariah review procedures. In addition, the findings reveal
that systematic communications of issues in Shariah review findings to the management
and reporting the final findings to a Shariah committee is crucial in minimising threats
of independence. Finally, timeliness in reporting and leveraging on other functions is
proposed to enhance the effectiveness of Shariah review practices.
Theoretical contribution/Originality: This study applies institutional theory in assessing
of how Shariah review practices are being implemented in Malaysian IBs. Comparatively,
most prior studies utilise agency theory, which considers Shariah review practices as an
oversight function in IBs.
Practitioner/Policy implication: Insights from this study underline the importance of
comprehensive guidelines on Shariah review practices. This is because they enhance the
standardisation of practices which improves the comparability, understandability, and
quality of the work performed by Shariah officers. The study also suggests that IBs revisit
their leveraging models to ensure efficient coordination of resources and improve reporting
to their Shariah committees.
Originality/value: This study contributes to the literature on the establishment of the
Shariah review function and internal modules of Shariah review practices through
normative, coercive, and mimetic isomorphisms.