Role of the Central Bank in implementation of Value-Based Islamic Banking and Reporting in Bahrain – Exploring the challenges

  • Akhtar Ali Saeed Mohammed University of Malaya, Department of Shariah and Management
  • Fadillah Mansor University of Malaya, Department of Shariah and Management https://orcid.org/0000-0003-0423-953X
Keywords: Value-based Islamic Banking (VBIB), Islamic Finance, Central Bank of Bahrain (CBB), AAOIFI, CBB framework

Abstract

This paper aims to explore the role of the Central Bank of Bahrain (CBB) in the implementation of Value-Based Islamic Banking (VBIB) and Reporting in Bahrain and explore the related challenges and provides suggestions that how the central bank can encourage the Islamic banks to align their operations for making a positive impact in society. The study employs a qualitative approach to understand the role of CBB in such implementation in Bahrain. The findings reveal that based on Islamic principles and Maqasid al-Shari’ah, CBB is yet to develop a strategy paper and framework for the value-based Islamic banking and reporting for the Islamic banking practices towards the well-being of the society and social objectives. As there has been very little written on value-based Islamic banking (VBIB) and reporting in Bahrain. Therefore, the study also adds value to the current Islamic finance literature and identifies the need for reporting standards to improve the VBIB practice in Bahrain in the future.

References

AAOIFI. (2010). Governance Standards No. 7: Corporate Social Responsibility, Conduct and Disclosure for Islamic Financial Institutions. Bahrain: AAOIFI.

Abu-Baker, N., & Naser, K. (2000). Empirical evidence on corporate social disclosure (CSD) practice in Jordan. IJCM, 10(3), 18–34

Ahmad, N., Shafique, M. N., & Ahmad, H. (2015). Does Islamic Banking System Contributes to Economic Development. Nigerian Chapter of Arabian Journal of Business and Management Review, 3(8), 1–5. https://doi.org/10.12816/0014522

Ahmed, I., Akhtar, M., Ahmed, I., & Aziz, S. (2017). Practices Of Islamic Banking In The Light Of Islamic Ethics : A Critical Review Faculty of Management Sciences , Riphah International University , FAST School of Management , National University of Computer & Riphah Center for Islamic Business, Riphah In, 3(3), 2017.

Ali Aribi, Z., & Arun, T. (2014). Corporate Social Responsibility and Islamic Financial Institutions (IFIs): Management Perceptions from IFIs in Bahrain. Journal of Business Ethics, 129(4), 785–794. https://doi.org/10.1007/s10551-014-2132-9

Al-Mograbi, A. (1996), The Social Responsibility of Islamic Banks, International Institute of Islamic Thoughts, in Arabic.

Balala, Maha-Hanaan. Islamic Finance and Law: Theory and Practice in a Globalized World. New York: I.B. Tauris, 2010.

Bank Negara Malaysia, C. B. of M. (2017). Value-based Intermediation: Strengthening the Roles and Impact of Islamic Finance. ACS Applied Materials and Interfaces, 10(BNM/RH/DP034-1), 1–36. https://doi.org/10.1021/acsami.7b18154

Bank Negara Malaysia, C. B. of M. (2018). Implementation Guide for Value-based Intermediation.

Chapra, U. (2008). The Islamic Vision of Development in the Light of Maqāsid Al-Sharī‘ah, Islamic Research and Training Institute Islamic Development Bank Jeddah, DOI: 10.13140/RG.2.1.4188.5047

Cresswell, J. W. (2014). Research Design Qualitative, Quantitative, and Mixed Methods Approaches.

Durrani, A., Rosmin, M., & Volz, U. (2020). The role of central banks in scaling up sustainable finance–what do monetary authorities in the Asia-Pacific region think? Journal of Sustainable Finance and Investment, 10(2), 92–112. https://doi.org/10.1080/20430795.2020.1715095

El-Ghattis. (2011). Islamic Banking’s Role in Economic Development: Future Outlook. Journal of Applied Business Research, 1–23. Retrieved from http://lawsworld.net/articles/islamic-bankings-role-in-economic-development-future-outlook.pdf

Farina V., Galloppo G., Previati D.A. (2019) Central Banks’ Commitment to Stakeholders: CSR in the Eurosystem: 2006–2016. In: Gualandri E., Venturelli V., Sclip A. (eds) Frontier Topics in Banking. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-16295-5_8

Ghaffour, E. A. R. (2017). Value-Based Intermediation ( VBI ) - propelling Islamic finance. BIS Bulletin, 1–4.

Ghazanfar, S. M., & Islahi, A. A. (1997). Economic Thought of Al-Ghazali. Islamic Economics Research Series, 80.

Global Alliance Values-Based Banking. (2015). What are Principles of Values-based Banking ?

Haniffa, R. & Hudaib, M. (2007). Exploring the Ethical Identity of Islamic Banks via Communication in Annual Reports. Journal of Business Ethics, 76 (1).

H.Beseiso, F. (2013). Central Banking Role In Shaping the Future of Islamic Banking (p. 22). Abu Dhabi - United Arab Emirates.

Hassan, R. B., & Nor, F. M. (2019). Value-Based Intermediation : An Analysis from The Perspective of Shariah And Its Value-Based Intermediation: An Analysis from The Perspective of Shariah And Its Objectives. IIUM Press, (C), 81–89.

Hurayra, M. A. (2015). Achievement of Maqasid al-Shari'ah in Islamic Banking: An Evaluation of Islami Bank Bangladesh Limited. Global Journal of Computer Science and Technology: A Hardware & Computation, 15(1), 9–16.

Kamla, R. Gallhofer, S. & Haslam, J. (2006). Islam, nature and accounting: Islamic principles and the notion of accounting for the environment, Accounting Forum. 30(3), 245-165

Khan, T. (2019). Reforming Islamic Finance for Achieving Sustainable Development Goals, 32(1), 3–21. https://doi.org/10.4197/Islec.32-1.1

Maali, B., Casson, P., & Napier, C. (2006). Social reporting by Islamic banks. Abacus, 42(2). https://doi.org/10.1111/j.1468-4497.2006.00200.x

Mohd Yunus, N. S. (2018). Value-based intermediation - beyond profit. BIS Central Bankers’ Speeches, 1–4.

Myers, T. A., & Hassanzadeh, E. (2013). The Interconnections Between Islamic Finance and Sustainable Finance. International Institute for Sustainable Development, 1–28.

Patton, M. Q. (2015). Qualitative Research & Evaluation Methods (4th edition). SAGE Publications, Inc.

Payne, D.M., Raiborn, C.A. Sustainable Development: The Ethics Support the Economics. Journal of Business Ethics 32, 157–168 (2001). https://doi.org/10.1023/A:1010726830191

Sadiq, R., & Mushtaq, A. (2015). The Role of Islamic Finance in Sustainable Development. Journal of Islamic Thought and Civilization, 5(I), 46–65.

Saeed Mohammed, A. A., & Mansor, F. (2021). Value-based Islamic banking and reporting in Bahrain. International Journal of Ethics and Systems, ahead-of-p(ahead-of-print). https://doi.org/10.1108/ijoes-09-2020-0141

Thresna Irijanto, T., Azlan, M., Zaidi, S., Ghafar Ismail, A., & Arshad, N. C. (2016). Al Ghazali’s Thoughts of Economic Growth Theory, A Contribution with System Thinking. Scientific Journal of PPI-UKM, (2356–2536), 233–240.

Usmani, M. T. (2007). An Introduction to Islamic Finance. An Introduction to Islamic Finance.

Wajdi Dusuki, A., & Irwani Abdullah, N. (2007). Why do Malaysian customers patronise Islamic banks? International Journal of Bank Marketing, 25(3), 142–160. https://doi.org/10.1108/02652320710739850

Weiss, J (2015). Values-Based Banking (15/03 No. 15/03). Vienna. Retrieved from www.unep.org/inquiry

Yusuf M Y, Bahari Z B (2015). Islamic corporate social responsibility in Islamic banking: Towards poverty alleviation. In H A El-Karanshawy et al. (Eds.), Ethics, Governance, and Regulation in Islamic Finance. Doha, Qatar: Bloomsbury Qatar Foundation, Paper presented at the 8th International Conference on Islamic Economics & Finance, Doha, Qatar

Zaher, T. S., & Kabir Hassan, M. (2003). A Comparative Literature Survey of Islamic Finance and Banking. Financial Markets, Institutions and Instruments, 10(4), 155–199. https://doi.org/10.1111/1468-0416.00044

Zikmund, W. G., Carr, J. C., Babin, B., & Griffin, M. (2018). Business Research Methods (8th Editio). George Doyle.

https://www.salaamgateway.com/en/story/saudi_arabias_idb_plans_blockchainbased_financial_inclusion_product-Salaam20102017044009/ Saudi Arabia’s IDB plans blockchain-based financial inclusion product

http://www.albaraka.com/default.asp?action=article&id=46

https://www.revolvy.com/main/index.php?s=Qard%20al-Hasan

https://www.islamicfinance.com/islamic-banks-bahrain/page/2/?p=true&search1=banks&country=Bahrain

http://www.cbb.gov.bh/page-p-cbb_register.htm

https://www.firstgreenbank.com/

https://charitybank.org/

http://www.grameen.com/

http://www.islamic-banking.com/what_is_ibanking.aspx

http://saudigazette.com.sa/article/524120/BUSINESS/Islamic-finance-plays-larger-role-in-sustaining-economic-growth

https://www.shareable.net/blog/a-shareable-explainer-what-is-values-based-banking

This piece was written by Isabel Benitez, who is responsible for International Media at the New Economy and Social Innovation Forum (NESI Forum), with the contributions from the Global Alliance for Banking on Values (GABV), Triodos Bank, and Banca Ética Group, partners of the NESI Forum.

https://www.thestar.com.my/business/business-news/2018/10/03/guidance-on-value-banking/

https://www.euromoney.com/article/b19zzgy0hljjvg/impact-banking-putting-the-impact-back-into-islamic-finance?copyrightInfo=truehttps://www.cbb.gov.bh/, November 2019

https://albaraka.bh/en-gb/, November 2019

https://www.ithmaarbank.com/, November 2019

https://ibdarbank.com/, November 2019

https://www.alsalambahrain.com/ November 2019

https://www.bisb.com/, November 2019

http://www.khcbonline.com/en, November 2019

https://www.kfh.bh/bahrain/en/corporate-banking.html, November 2019

https://www.bank-abc.com/En/IslamicBank/Pages/default.aspx, November 2019

https://www.bankalkhair.com/en/international-offices/bank-alkhair.html, November 2019

https://www.citi.com/icg/sa/emea/bahrain/, November 2019

https://1stenergybank.com/, November 2019

https://www.gfh.com/, November 2019

http://www.gbcorponline.com/, November 2019

https://ibdarbank.com/, November 2019

https://www.iib-bahrain.com/, November 2019

http://www.inv-darbank.com/, November 2019

https://www.arcapita.com/, November 2019

https://www.lmcbahrain.com/, November 2019

http://www.seera.com/, November 2019

https://www.vc-bank.com/, November 2019

https://www.un.org/development/desa/disabilities/envision2030.html.

Published
2021-12-30
How to Cite
Saeed Mohammed, A. A., & Mansor, F. (2021). Role of the Central Bank in implementation of Value-Based Islamic Banking and Reporting in Bahrain – Exploring the challenges. European Journal of Islamic Finance, (19), 54-62. https://doi.org/10.13135/2421-2172/6114