The influences of board of directors and management inShariahgovernance guidelines of the Islamic banks in Bangladesh

Md. Kausar Alam, Muhammad Shahin Miah, Md. Naim Siddiquii and Mohammad Imtiaz Hossain

Journal of Islamic Accounting and Business Research, 2020, vol. 11, issue 9, 1633-1647

Abstract: Purpose - The purpose of this paper is to investigate the influence of board of directors (BODs) and management in the decision-making ofShariahsupervisory board (SSB) and implementation of their decisions. Design/methodology/approach - The paper implements qualitative case research to explore the influences of BODs and management in the context of Bangladesh. To accomplish the research objective, we collected data from the 17 respondents from the regulators,Shariahsupervisory boards,Shariahdepartment executives andShariahexperts from the central bank and Islamic banks of Bangladesh. Findings - This study found that management of Islamic banks indirectly influences the practices and functions of SSB, their decision-making and other activities. However, from either ethical or moral ground, management cannot influence SSB; management does not have legitimate power to control over their activities. Sometimes the BODs and management use the SSB andShariahexecutives as a showcase and rubber stamp to accomplish their goals and to maximize profit in either partially or fully. Management assumes thatShariahofficers are accomplishing and minimizing their income and hindering business functions without any contributions. Research limitations/implications - The study significantly contributed to the national and global regulatory bodies by providing suggestions that regulatory bodies should be more concerned with the independence of SSB andShariahexecutive officers. Besides, the BODs and management should be careful in handlingShariahissues as they were committed to do Islamic banking as perShariahlaw. The study has theoretical contributions regarding the stakeholder and legitimacy theories. Originality/value - This is the first research which extends the literature of the Islamic banking andShariahgovernance mechanisms in perspective of Bangladesh concerning the influence of BODs and management in the decision-making of SSB and implementation of their decisions.

Keywords: Shariah governance framework; Management; Board of directors; Islamic banks; Bangladesh; G18; G21; G28; G38 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jiabrp:jiabr-08-2019-0155

DOI: 10.1108/JIABR-08-2019-0155

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