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Exploring the Ethical Identity of Islamic Banks


Appendix A1 Contd.

Theme: underlying philosophy and values

  • 5.

    Number of meetings held

  • 6.

    Examination of all business transactions ex ante and ex

post 7. Examination of a sample of business transactions ex ante and ex post

  • 8.

    Report defects in product: specific and detailed

  • 9.

    Recommendation to rectify defects in product

  • 10.

    Action taken by mgmt. to rectify defects in product

  • 11.

    Distribution of profits and losses comply to Shari’ah


1 Another possibility of assessing the degree of vari- ation in Islamic corporate identity is to compare be- tween the actual and communicated ethical identities. However, we limited the scope of our research to only comparing between the communicated and ideal ethical identities because the comparison of actual and communi- cated ethical identities requires a different research meth- odology, such as symbolic interactionism using in-depth interviews.

2 Internet communication is now becoming more popular for corporations to disseminate information regarding their achievements and goals, especially in terms of social responsibility. Fukukawa and Moon (2004) used website reporting to study communica- tion of corporate social responsibility. We also looked at the Internet but concentrate only on the annual reports.

3 Prohibition of interest or usury can also be found in the Old Testament (see Exodus 22:25, Leviticus 25:35–36, Deuteronomy 23:20, Psalms 15:5, Proverbs 28:8, Nehemiah 5:7 and Ezakhiel 18:8, 13, 17 and 22:12).

4 Sternberg (2000, p. 71), in discussing business ethics, differentiates between religious and non-religious ethical systems, arguing that the former focuses on the other world and is connected with the divine or the saving of souls and that its moral guidance for business is limited. For Muslims, the Shari’ah (Islamic teachings), which encompasses every aspect of life, does not draw distinctions between the two.

5 The first revelation emphasizes that interest de- prives wealth of God’s blessings (Surah al-Rum, Chap- ter 30:39); the second condemns it as it is equivalent to wrongful appropriation of property belonging to others

(Surah al-Nisa, Chapter 39:161); the third revelation enjoins Muslims to stay clear of interest for the sake of their own welfare (Surah al-Imran, Chapter 3:130–132); and the fourth establishes a clear distinction between interest and trade, urging Muslims to take only the principal sum and to forgo even this sum if the bor- rower is unable to repay. It is further declared that those who disregard the prohibition of interest are at war with God and His Prophet. (Surah al-Baqarah, Chapter 2:275–28l). See translation of The Holy Qur’an by Ali (1989).

6 Zakah is a religious duty and type of worship levied on Muslim individuals only. The beneficiaries of zakah are the poor (faqir), the needy (miskin), the zakah collec- tors (amil), those who reconciled to Islam (al-mua’lafah gulubahum), the captives and slaves (riqab), debtors (gharim), those serving the cause of God (fi-sabilillah) and the travellers (ibn-al-sabil). The rate is dependent on the type of economic activities (see El-Ashker, 1987, pp. 48–49).

7 It is important for zakah recipients to know the source of zakah. If it is not of a lawful source, the recipients should abstain therefrom. In the modern world, it is the duty of the SSB, auditor and zakah offi- cials to check the source of the zakah on behalf of the recipients.

8 This aspect has been stressed in the Hadith (say- ings of the Prophet Mohammad): as narrated by Abu Huraira: The Prophet said, "Allah said, ’I will be an opponent to three types of people on the Day of Res- urrection: 1. one who makes a covenant in my name, but proves treacherous; 2. one who sells a free person and eats his price; and 3. one who employs a labourer and takes full work from him but does not pay him for his labour" (Bukhari).

9 This aspect is stressed in the following Hadith: ‘‘Do not tax the labourer with work which is beyond his powers (Bukhari).

10 This aspect is stressed in the Hadith: ‘‘He who has imposed, on a group of Muslims, a person who is inferior to another person who could be availed of, has behaved treacherously towards God, His Prophet, and the commonalty of Muslims (Siddiqi, 1980).

11 ‘‘If the debtor is in difficulty, grant him time till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew (Qur’an, 2:280).

12 We could not find annual reports for IBs in Qatar and our list did not indicate existence of any IBs in Oman.

13 Some of the items in our checklist may be irrel- evant in certain circumstances. For instance, we in- cluded in our checklist the following items under the

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