Roszaini Haniffa and
w h e r e E I I j i s t h e e t h i c a l i d e n t i t y i n d e x , n j t number of constructs or items disclosed by jth firm, h e n j < = 7 8 , a n d X i j = 1 i f i t h c o n s t r u c t o r i t e disclosed, 0 if ith construct or item is not disclosed, m i s s o t h a t 0 < = I j < = 1 .
We then ranked each bank based on their Ethical Identity Index (EII). The higher the EII, the less the variation between the corporation’s communicated and ideal ethical identities. In other words, a high EII suggests that the corporation has adopted a com- munication strategy that fits its religious ethical identity while a low EII suggests the need to im- prove its communication strategy to enhance its ethical image and reputation and to gain competitive advantage.
Analysis and discussion of results
Table I presents the results of the overall EII and the ranking for the seven IBs for each of the 3 years examined in this study as well as the 3-year mean EII and ranking (see the bottom three rows of the table).
It can be seen from the table that the highest overall Ethical Identity Index (EII) for three consec- utive years goes to Bahrain Islamic Bank (BIB), followed by Shamil Islamic Bank (SIB), while the lowest EII for three consecutive years goes to Al- Rajhi Bank (ARB). In 2002, the EII ranged from 0.21 to 0.72, while in 2003 and 2004, the ranges were 0.12–0.63 and 0.14–0.61, respectively. The results suggest variation and inconsistencies between the communicated and ideal ethical identities over the 3-year period examined.
Based on the 3-year mean EII for each bank, it can be seen that the range was 0.16–0.65. This means that BIB had 65% of the constructs under the eight dimensions in the ideal ethical identity research instrument being communicated in their annual reports while ARB addressed only 16% of the constructs in the research instrument. In other words, the overall 3-year mean EII of 0.65 for BIB suggests that there is less discrepancy between the ideal and communicated ethical identities while the overall 3-year mean EII of 0.16 for ARB suggests a large disparity between the ideal and communicated ethical identities. As such, ARB may need to reassess its communication strategy to enhance the strength
of its ethical image and reputation in order to stay competitive.
Table I also shows the EII, ranking and the 3-year mean EII under each dimension (see rows 1–8). The last four columns of the table show the annual mean EII under each dimension and the overall mean EII and ranking based on 21 observations for each dimension. This is further discussed below.
Dimension: vision and mission statement
Under the dimension vision and mission’, BIB scored the highest EII, followed by ADIB, with DIB being the lowest for three consecutive years. The EII for this dimension seems to improve over the 3-year period for three banks, BIB, DIB and KFH; is constant for ABB and ARB; and fluctuates in the case of ADIB and SIB. The 3-year mean EII for this dimension (based on each bank) ranged from 0.04 to 0.85. We noted that DIB did not communicate any constructs under this dimension in 2002 and 2003 but did so in 2004, while BIB communicated all constructs under this dimension in 2004.
One possible explanation for DIB addressing this dimension in 2004 is due to a desire to increase its competitiveness in the region, as suggested in its annual report:
Undoubtedly, these accomplishments pose further challenges to the Bank in its endeavour to maintain and accelerate its growth. Thus, during 2005 and the years to come, the Bank endeavours to expand its activities and widen its operations to cover regional markets by opening new bran- ches or representative offices; by concluding new strategic alliances and partnerships with major local and international companies and by launching specialized and diversified investment portfolios with an aim to enhance shareholders’ value (DIB Annual Report 2004, p. 2).
Similarly, a desire to increase its competitiveness in the region seems to have caused BIB to enhance its communication strategy in 2004, as evidenced in the following statement:
With a strong and growing network of branches, currently numbered at 12, the Bank is well positioned to meet strong and growing demand in the market for banking, financing and investment opportunities on behalf of individuals and