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Comparative Analysis of Islamic Banking Supervision and Regulation Development

Author

Listed:
  • Zulkhibri Abdul Majid , Muhamed

    (Islamic Development Bank)

  • Ghazal , Reza

    (Economic Research and Policy Dept., Islamic Development Bank)

Abstract
The paper highlights gaps in key areas of legislation, regulation and supervision, standard-setting of Shari'ah-compliance and pinpoints areas where improvement is desirable to ensure stability in the Islamic banking and finance sector. The comparative analysis focuses on 11 selected Muslim countries (Malaysia, Iran, Bahrain, Saudi Arabia, Pakistan, Turkey, Indonesia, Sudan, Kuwait, U.A.E and Jordan) and two non-Muslim countries (Singapore and the United Kingdom). The findings suggest that the legislation for Islamic financial institutions in most countries is formulated in the image of conventional banking. Some countries lack proper legal framework with some notable issues including the lack of a dedicated Islamic banking law (Saudi Arabia), few laws relating to corporate governance (Iran, Bahrain, Kuwait, U.A.E). However, to date, most of countries follow the regulations of their domicile as well as International Accounting Standards (IAS). The paper also suggests that due to various difficulties to harmonize Islamic banking practices, facilitating cluster or regional convergence may be the first step towards greater harmonization for this sector.

Suggested Citation

  • Zulkhibri Abdul Majid , Muhamed & Ghazal , Reza, 2012. "Comparative Analysis of Islamic Banking Supervision and Regulation Development," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(3), pages 113-162, April.
    • Handle: RePEc:mbr:jmonec:v:6:y:2012:i:3:p:113-162
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    References listed on IDEAS

    as
    1. Wilson, Rodney, 2009. "The development of Islamic finance in the GCC," LSE Research Online Documents on Economics 55281, London School of Economics and Political Science, LSE Library.
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    3. El-Hawary & Dahlia & Grais, Wafik & Iqbal, Zamir, 2004. "Regulating islamic financial institutions : The nature of the regulated," Policy Research Working Paper Series 3227, The World Bank.
    4. Khan, Tariqullah & Chapra, Mohammad Umar, 2000. "Regulations and Supervision of Islamic Banks (Occasional Papers)," Occasional Papers 85, The Islamic Research and Teaching Institute (IRTI).
    5. Hennie Van Greuning & Zamir Iqbal, 2008. "Risk Analysis for Islamic Banks," World Bank Publications - Books, The World Bank Group, number 6923.
    6. Khan, Tariqullah & Ahmed, Habib, 2001. "Risk Management: An Analysis of Issues in Islamic Financial Industry (Occasional Paper)," Occasional Papers 2001, The Islamic Research and Teaching Institute (IRTI).
    7. Simon Archer & Rifaat Abdel Karim & Talla Al-Deehani, 1998. "Financial Contracting, Governance Structures and the Accounting Regulation of Islamic Banks: An Analysis in Terms of Agency Theory and Transaction Cost Economics," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 2(2), pages 149-170, June.
    8. Munawar Iqbal & Philip Molyneux, 2005. "Thirty Years of Islamic Banking," Palgrave Macmillan Studies in Banking and Financial Institutions, Palgrave Macmillan, number 978-0-230-50322-9.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Islamic Banking; Regulation; Supervision; Shari'ah;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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