Challenges Faced by Malaysian Islamic Banks in Treating Shariah Non-compliance Events

Hani Omar, Rusni Hassan

2019

Abstract

Islamic finance in Malaysia has been growing rapidly in the past 30 years and continues to thrive in many countries. In 2019, a total of 16 Islamic banks (IBs) is listed and supervised by Bank Negara Malaysia (BNM) with 5 banks being foreign entities. In view of the rivalry with the conventional banking sector, Islamic banks (IBs) offer new innovative Islamic products and financial projects which may lead to greater risk of Shariah non-compliance (SNC) exposure to the Islamic Financial Institutions (IFIs) in its effort to stay competitive. This study intends to review the challenges faced by IBs in treating the SNC and propose recommendations for the existing policy to enhance the treatment of SNC. This study adopts qualitative research method by conducting semi-structured in-depth interviews with Islamic banking professionals targeting five IBs. Both the primary and secondary sources are used for data collection. The finding shows that there are a lot of minor concerns and challenges faced by IBs in managing SNC events in the industry. The finding of this study would contribute positively in terms of facilitating policy makers and regulators on enhancing the regulations and practices in ensuring zero SNC events. Simultaneously, enriching and contributing to the existing literature on the SNC practices by IBs so that more researchers can have larger resource of reference to diversify the topics related to this study.

Paper Citation

in Harvard Style

Omar H. and Hassan R. (2019). Challenges Faced by Malaysian Islamic Banks in Treating Shariah Non-compliance Events. In Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance - Volume 1: 7th AICIF, ISBN 978-989-758-473-2, pages 256-264. DOI: 10.5220/0010145100002898

in Bibtex Style

@conference{7th aicif19,
author={Hani Omar and Rusni Hassan},
title={Challenges Faced by Malaysian Islamic Banks in Treating Shariah Non-compliance Events},
booktitle={Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance - Volume 1: 7th AICIF,},
year={2019},
pages={256-264},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0010145100002898},
isbn={978-989-758-473-2},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance - Volume 1: 7th AICIF,
TI - Challenges Faced by Malaysian Islamic Banks in Treating Shariah Non-compliance Events
SN - 978-989-758-473-2
AU - Omar H.
AU - Hassan R.
PY - 2019
SP - 256
EP - 264
DO - 10.5220/0010145100002898