Stakeholders Model of Governance in Islamic Economic System

21 Pages Posted: 17 Apr 2018

See all articles by Zamir Iqbal

Zamir Iqbal

Islamic Development Bank

Abbas Mirakhor

International Centre for Education in Islamic Finance (INCEIF)

Date Written: March 1, 2004

Abstract

The paper discusses the design of an efficient and optimal corporate governance structure of a firm within Islamic economic system. The objective of this paper is to identify factors, which will influence corporate governance within an Islamic economic system and to examine if corporate governance model will be ‘shareholder’- or ‘stakeholder’- centered? The paper argues that the governance model in Islamic economic system is a stakeholder-oriented model where governance structure and process at system and firm level protect rights of stakeholders who are exposed to any risk as a result of firm’s activities. Whereas conventional system is struggling with finding convincing arguments to justify stakeholders’ participation in governance, the foundation of a stakeholder model is found in Islam’s principles of property rights, commitment to explicit and implicit contractual agreements and implementation of an effective incentive system. The paper also discusses the implication of a stakeholder model on depositors, Islamic financial institutions, and regulators.

Suggested Citation

Iqbal, Zamir and Mirakhor, Abbas, Stakeholders Model of Governance in Islamic Economic System (March 1, 2004). Islamic Economic Studies, Vol. 11, No. 2, 2004, Available at SSRN: https://ssrn.com/abstract=3164178

Zamir Iqbal (Contact Author)

Islamic Development Bank ( email )

P. Box. 5925
Private Sector
Jeddah, 21432
Saudi Arabia

Abbas Mirakhor

International Centre for Education in Islamic Finance (INCEIF) ( email )

Kuala Lumpur
Malaysia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
290
Abstract Views
1,047
rank
128,046
PlumX Metrics