Shari'ah Compliance as a Matter for Financial Performance

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Author(s): Md. Harun Ur Rashid (International Islamic University, Bangladesh), Md Hafij Ullah (Coventry University, UK)and Faruk Bhuiyan (Macquarie University, Australia)
Copyright: 2020
Pages: 17
Source title: Handbook of Research on Theory and Practice of Global Islamic Finance
Source Author(s)/Editor(s): Abdul Rafay (University of Management and Technology, Pakistan)
DOI: 10.4018/978-1-7998-0218-1.ch020

Keywords: Accounting & Finance / Accounting and Finance / Business & Management / Business Science Reference

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Abstract

Islamic banks must comply with the Shari'ah rulings fully as it is the foundation of Islamic banks. However, the level of Shari'ah compliance is not the same among the Islamic banks. Similarly, despite performing well, the financial performances of Islamic banks differ from each other. Therefore, the chapter explores the association between financial performance and Shari'ah compliance. The chapter used both the primary and secondary data. The primary data was collected through surveying 300 bank executives from six full-fledged Islamic banks operated in Bangladesh with a structured questionnaire on Shari'ah compliance, whereas information on financial performance were extracted from the annual reports of the sample banks. Descriptive statistics and regression analysis were used to analyze the data and conclude the findings. The findings show that Shari'ah compliance has a positive and significant impact on the financial performance with respect to the total liabilities and total assets.

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Shari'ah Compliance as a Matter for Financial Performance

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