Shariah Governance Case Study

2.2.5.Shariah Governance in MENA

The Shariah governance system as defined by The Islamic Financial Services Board (IFSB) refers to a set of institutional and organisational arrangements to oversee Shariah compliance aspects in Islamic Financial Institutions (IFIs). In this regard, the majority of IFIs have established their own Shariah board and some of them have even set up a dedicated internal Shariah review unit or department to support the Shariah board in performing its function. The Bank Islam Malaysia Berhad (BNM) was the first to set up a Shariah board in 1983. After 10 years, in 1993, BNM introduced an interest-free banking scheme allowing conventional banks to offer Islamic banking products through its windows. A few Muslim countries, such as Pakistan, Sudan and Iran, have completely Islamised their economies, while other Muslim countries follow a dual banking system with both conventional and Islamic financial institutions (Zaher and Hassan, 2001) to attract different customer preferences. It is important to mention that Islamic banks perform the same essential functions as conventional banks; however, they do so in accordance with the rules and principles of Islamic Sharia (Iqbal and Mirakhor, 2007), thus providing an alternative to finance that addresses the

Results have shown that across all three countries, the modern perspective was the more popular view (Jamali et al., 2008), despite the lower practice level or lower priority of CSR in developing countries that literature has implied (Retabb et al., 2006). While some managers in this part of the world still hold on to the perspective that the business of business is business, there seems to be a larger percentage of managers in the Middle Eastern context that see an added value in CSR, serving a wider range of stakeholders (Jamali et al.,