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Exploring the Ethical Identity of Islamic Banks


activities. In short, there is room for the IBs sur- veyed in this study to communicate more on this

the nation’s fight against drug abuse and its negative social and economic effects on individuals and the society (KFH


Annual Report 2002, p. 18).

Dimension: commitments toward community and society

Sponsorship of events was communicated by only two IBs: ADIB in 2002 and SIB in 2003, as evi- denced by the following statement:

The results indicate the KFH had the highest EII for three consecutive years with regard to this dimen- sion. There was no communication on this aspect by DIB in 2002, by ADIB in 2004 and by ARB in 2003 and 2004. The general trend seems to be a decline in such communication for most of the IBs surveyed. The 3-year mean EII ranged from 0.05 to 0.38, the lowest being ARB and the highest KFH.

The Bank sponsored a number of conferences and exhibitions last year. These included the IMF-World Bank conference in Dubai, world economic forum in Jordan, world Islamic banking conference, the AAOIFI-World Bank conference and the MTC-Vodafone exhibition in Bahrain (SIB An- nual Report 2003, p. 13).

Despite corporate social responsibility forming an integral part of Islamic business ethics, it is surprising to find IBs not communicating much on this important aspect in their corporate annual reports. Three IBs indicated that they operate ladies’ branches, as demonstrated in the following statement:

... in support of the UAE businesswomen, the ladies branch...provides ladies with excellent banking services that combine traditional values with a progressive outlook (ADIB Annual Report 2002, p. 7).

This indicates commitment to meeting societal val- ues in a region where segregation of gender is common practice. In terms of commitments to social role, four IBs explicitly declared this. The following statements present disclosure by two of the IBs:

... the Bank discharged its social responsibilities by donating good faith Qard fund for marriage, refurbishment, treatments, etc. (BIB Annual Report 2002, p. 37).

... through its participation in various community develop- ment programmes makes a sincere effort at making the society a better place to live in (ADIB Annual Report 2003, p. 18).

Dimension: Shari’ah Supervisory Board (SSB)

Under the dimension Shari’ah Supervisory Board’, five IBs were found to communicate consistently over the 3-year period: KFH, ADIB, ARB, SIB and DIB. Interestingly, we observed a downward trend in communication on this aspect by BIB over the 3-year period. The 3-year mean EII also indicates three IBs to communicate more than 50% of the constructs under this dimension: ABB, SIB and BIB. Our observation suggests the driving force behind better communication on this aspect may be attrib- uted to adoption of AAOIFI’s ruling in Bahrain. ARB’s EII is significantly lower (0.12) than the rest, indicating potential communicated ethical identity problems.

The SSB is entrusted with monitoring the con- duct of those trusted with the resources (manage- ment) and providing assurance that the business is conducted according to the Islamic precepts. All IBs, with the exception of ARB, disclosed the names of their SSB members and only BIB disclosed the remuneration of their SSB members (in the notes to the account section of the annual report). Only BIB and SIB consistently indicated the number of meetings held.

Besides donating to charitable causes, one IB also indicated commitments to participate in government social activities, as disclosed in the following statement:

In expressing an opinion on the operations of the IBs, the SSB report of BIB suggests that their reviews were based on all transactions, as indicated in the following extract from its annual report:

In cooperation with the Kuwait Ministry of Health, KFH donated four million Kuwaiti Dinars to build a hospital for rehabilitation and treatment of drug addicts...participates in

The Shari’ah Supervisory Board’s monitoring functions included the checking of the Bank’s documents and proce- dures to scrutinize each single operation carried out by the

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