SHARIAH COMPLIANCE OF BANGLADESHI ISLAMIC BANKS: DOES IT DIFFER ACROSS BANK MODALITIES?

Syed Mohammad Khaled Rahman (), Mohammad Ashraful Chowdhury, Md. Mofazzal Hossain (), Fakrul Islam (), Tanvin Hossin Mim () and Nazmul Alam Nirjon ()
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Syed Mohammad Khaled Rahman: Shahjalal University of Science and Technology, Bangladesh
Md. Mofazzal Hossain: Shahjalal University of Science and Technology, Bangladesh
Fakrul Islam: Shahjalal University of Science and Technology, Bangladesh
Tanvin Hossin Mim: Shahjalal University of Science and Technology, Bangladesh
Nazmul Alam Nirjon: Shahjalal University of Science and Technology, Bangladesh

Journal of Islamic Monetary Economics and Finance, 2024, vol. 10, issue 2, 329-356

Abstract: This study assesses the degree of Shariah compliance of different Islamic banking modalities in Bangladesh from the perspectives of investment clients, depositors, and bankers. It adopts a structured questionnaire developed based on AAOIFI standards to gather data from 392 respondents. ANOVA tests and t-tests are applied to identify significant Shariah non-compliance areas and differences in Shariah compliance scores among different Islamic bank modalities. From investment clients’ perspective, it is seen that in every mode of investment except Ijarah, Shariah is explicitly violated throughout the Islamic banking industry. Significant Shariah non-compliance is seen in Bai-Murabaha, Bai-Muajjal, cash memos, and receipt and disbursement of goods, while Shariah is complied with in contract documents and client dealings. Bankers view all aspects except financial charges for delay to be Shariah compliant. From the depositors’ perspective, Shariah non-compliance is observed in the non-disclosure of information. There is no significant difference in Shariah compliance level between full-fledged and non-full-fledged Islamic banks. These findings should prove useful as a reference point for Bangladesh Bank, Islamic banks, policymakers, depositors, investors, and regulators to address Shariah non-compliance areas to ensure adherence to Shariah standards.

Keywords: Islamic; Bank; Shariah; Compliance; Score (search for similar items in EconPapers)
JEL-codes: G21 N25 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:10:y:2024:i:2e:p:329-356

DOI: 10.21098/jimf.v10i2.1887

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