The Effectiveness of Sharī'ah Supervisory Board Roles in Islamic Banks
17 Pages Posted: 21 Nov 2013
Date Written: April 13, 2012
Among the main issues surround corporate governance in Islamic banking is that dealing with the role of Sharī'ah Supervisory Boards (SSB). The role of the SSB is particularly important before the launching of any new Islamic banking product and in making strategic decisions. Therefore, in Islamic banking, the role of the SSB is essential, particularly as the Sharī'ah-compliance gatekeeper. In practise, the Banks tend to practice fatwa-shopping to support their new Islamic products and launch them as lawful Islamic products by selecting SSB who will approve and works in line with their long-term products concept. Therefore internal supervision of Sharī'ah scholar inside of SSB will mainly be important to prevent fatwa shopping in Islamic banks. The main focus of this conceptual research is to analyse the effectiveness of the SSB as the Sharī'ah gatekeeper in Islamic Banks. The previous studies have shown the urgencies of having SSB yet clearly stated the effectiveness SSB roles. Therefore this paper will contribute on developing the practical implementation of architecture and infrastructure for Islamic banks.
Keywords: Sharī'ah Supervisory Board, Effectiveness, Corporate Governance
JEL Classification: G20, G30, E58, G00, G34, G32, G24, G28, G38
Suggested Citation: Suggested Citation