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This paper aims to examine the practical issues in the Musharakah Mutanaqisah (MM) financing and subsequently, recommends possible solutions to mitigate these issues and improve the current practice.

This paper analyses the theory and current practices of MM offered by Islamic banks.

It is suggested that Islamic financial institutions consider revaluation of property’s value to its fair value, especially during termination of MM contract and annual or agreed periodic review of the market value of the assets to determine the “rental” payments by the customer. It is also recommended that Islamic financial institutions should share all associated costs in performing the contract.

Research findings reported in this paper contribute to the body of knowledge on MM in general and to the Islamic finance practices in Malaysia and abroad. Indeed, the Malaysia Central Bank (i.e. Bank Negara Malaysia) should form a special committee to look into the issues highlighted in this paper and recommend strict guidelines for Islamic financial institutions to improve their practices.

Islamic banks should extend the use of MM contract in automobile and trade financing where rent or profit could be easily identified and value of the asset is more certain. The regulators and Islamic financial standard setting authorities need to oversee the Shari’ah board decisions on MM contracts and keep the gates in the interest of ensuring a more viable and authentic Islamic finance industry.

This paper briefly views the current mode of MM contracts, specifically for home financing, and highlights the incompliance to Shari’ah requirements in exercising these contracts in practice.

This study aims to investigate the moderating effects of the Shariah committee (SC) on the extent of intellectual capital disclosure (ICD) of Islamic banks.

This study provides evidence from an analysis of a sample of Islamic banks in multiple countries over a seven-year period (2012–2018). The extent of intellectual capital information was measured and regressed against several corporate governance attributes covering board and audit committee characteristics, gender diversity of SC members and moderating variables of the SC, while controlling for firm-specific variables. A checklist was developed to measure the extent of the ICD of Islamic banks on a rubric scale ranging from 0 to 3.

The results show that the size and gender diversity among SC significantly influence the ICD practices of Islamic banks. Apart from contributing to the literature, this study may serve as valuable input for Islamic banking practitioners including regulators and standard setters to empower women and use all their potential for better intellectual capital output.

The paper highlights two main implications. Firstly, the regulator should look at the size and composition of the SC to enable a conducive environment for sound deliberation of Shariah matters. Secondly, the gender diversity among SC should be considered because women and man may have different approaches, and the best optimal combination of resources could enhance Islamic banks’ competitive advantage.

This study highlights the importance of gender diversity and size of SC in influencing the disclosure practices related to Shariah matters by the Islamic banks.

The purpose of this paper is to examine and compare the trend of intellectual capital disclosures (ICD) of Islamic banks under the International Financial Reporting Standards (IFRS) and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) regimes over a seven-year period (2012–2018).

A self-developed checklist was developed to measure the extent of ICD practices of Islamic banks in both regimes.

The results revealed a moderate increase in ICD practices over the period of the study. However, there is no significant difference in ICD between the two financial reporting regimes i.e. IFRS and AAOIFI-based banks. In fact, most of the IFRS-based banks have better ICD than AAOIFI-based banks throughout the analysis period. This study contributed to the ICD literature by introducing Shariah capital as a new category of information to disclose besides the common disclosure on human capital, relational and structural related information by the Islamic banks.

It is important for Islamic banks to distinguish themselves from conventional banks and ICD can be a conduit to show their uniqueness. The introduction of Shariah capital in this study reflects the main objective of Islamic bank’s existence, and it should become an important element in ICD. In fact, some form of guidelines or policy by regulating agencies could facilitate the ICD by Islamic banks and reflect the truth about their ability to capitalize on Intellectual capital and disclose about these practices to their stakeholders.

The introduction of Shariah capital as a new component to the existing components (i.e. human capital, structural capital and relational capital) of intellectual capital brings a new perspective to the research on ICD of Islamic banks. This paper further contributes to the scarce evidence of ICD of Islamic banks globally.

This paper aims to assess the ethical disclosure of Islamic banks (IBs) under different accounting regimes and to ascertain whether the adoption of an Islamic accounting standards (Auditing Organization for Islamic Financial Institutions [AAOIFI]) promotes the practice of ethical disclosure.

An ethical identity disclosure index was developed to serve as a benchmark to assess the level of the communicated ethical identity disclosure (CEID) of 47 IBs over 18 countries using annual reports.

The findings suggest that, overall, there is poor ethical disclosure practices and even banks that had some initiatives towards disclosures had no proper reference to benchmark for effective implementation of ethical reporting standards and had no plans for ethical and socially responsible schemes. There was no evidence to suggest that IBs that adapted the religious-based accounting regime (AAOIFI) had better levels of ethical disclosure.

Though poor practices of CEID are expected to increase reputational risks and the likelihood of loss of religious conscious customers and investors’ confidence and therefore market share and performance in the long-term, the current practice does not concur with this expectation. Furthermore, since there is no evidence to support the notion that the adoption of AAOIFI standards would support greater initiatives towards level of ethical identity disclosures, a mandatory requirement for effective disclosure through enforcement of AAOIFI’s financial reporting standards, specifically with regard to ethics and social and environmental commitment is needed.

In addition to introducing commonly accepted regulatory and supervisory guidelines and best practices that cater for the specificities of Islamic banking could significantly improve the level of CEID of IBs. In addition, the standardization of ethical (non-financial) reporting practices of IBs through guidelines and key performance indicators will facilitate CEID practices of IBs.

This paper contends that for Islamic bankers, ethics is an entrenched part of the business practice and should mitigate unethical behaviour, more so with the additional filter of Sharīʿah supervisory boards. Even if there are such practices due to ineffectiveness of Sharīʿah committees, management pressure to meet performance expectations and competitive pressures from peers in the conventional banking sector, it will not be in the interest of the banks to report them.

This study aims to explore a sustainable and responsible investment (SRI) sukuk model based on Musharakah that could be implemented to develop waqf properties and assets under the SRI sukuk framework in Malaysia. This includes proposing and designing a potential SRI sukuk model and seeking the opinion of subject-matter experts and industry practitioners on the model, its attractiveness to investors and its feasibility to implement in Malaysia.

The study adopts desk research and semi-structured interview as its methodology. A desk research is where a detailed critical review and analysis of past literature from reports, journals, framework, books and practices are undertaken. To establish a SRI sukuk model, the paper also studies the cases of the first SRI sukuk issued in Malaysia and other waqf-related sukuks that have been structured for the development of waqf property/asset in the past. Following that, the opinion of subject-matter experts and industry practitioners on the proposed SRI sukuk model is sought in a semi-structured interview.

Based on the interviewees’ response, the study proposes the most feasible SRI sukuk model that could be implemented in the Malaysian context for the development of waqf properties/assets, which is a Musharakah-based sukuk model. The model will be elaborated based on the purpose of development, functionality, choice of Shari’ah contract, obligor and return mechanism.

This paper is exploratory in nature. While it explores the structural point of view only, future research could analyse and identify the legal, regulatory, financial and Shari’ah aspects of the proposed model. Further empirical studies can be done to provide more comprehensive idea and knowledge regarding the subject matter.

The study serves great benefit to the government, waqf administrators, regulators, policymakers, foundations, corporations and interested investors to explore SRI sukuk as one of the feasible financial instruments to develop waqf in Malaysia.

This study proposes the use of an innovative financial instrument called SRI sukuk and structures a feasible SRI sukuk model to help realise the true roles of waqf as not only a religious tool but also one of the instruments for human, economic and social developments.

The purpose of this study is to propose a centralized Shariah governance framework (CSGF) for the Islamic banks and Shariah governance in Bangladesh as such, the existence and practices of the Shariah governance framework (SGF) are decentralized and diversified.

The paper implements a qualitative case study approach to develop a CSGF for the Islamic banks in Bangladesh. The data has been collected from 17 respondents through semi-structured interviews with a combination of regulators, Shariah supervisory board members, Shariah department executives and Shariah experts from the central bank and Islamic banks in Bangladesh.

This study proposes a CSGF which is comprising two-tier Shariah supervisory boards (SSBs), i.e. institutional SSB and centralized Shariah supervisory board (CSSB) under the central bank to monitor the overall functions of SG. The study recommends the setting up of four departments under the central bank to enhance the functions of CSSB. Besides, the central bank can introduce Shariah rating, external Shariah audit and external Shariah review through Islamic rating agencies and Islamic Chartered Accountant Firms for transparency and quality compliance which are more desired from the public and other stakeholders.

The study significantly contributed to the national and global regulatory bodies by providing a structural CSGF for the Islamic banks to perform their functions and activities smoothly.

The study outlines a CSGF for the Islamic banks in Bangladesh as the existing practices are diversified and decentralized. Therefore, this framework would be helpful for the central bank and Islamic banks in Bangladesh to promote unique practices of the SGF.

This is the first research that provides a structure of CSGF for Islamic banks in Bangladesh, while the central bank of Malaysia developed the first SGF. There is no study concerning the demographic figure of CSGF of Islamic banks in the entire literature.