Adoption of corporate governance and Islamic core values in Malaysian Islamic financial institutions

• Main Author: Daing Maruak, Sadek
• Format: Thesis
• Language: English; English
• Published: 2021
• Subjects: BP174 The practice of Islam; HD58.9 Organizational Effectiveness.; HG Finance
• Online Access: https://etd.uum.edu.my/10564/1/permission%20to%20deposit-grant%20the%20permission-s900268.pdf; https://etd.uum.edu.my/10564/2/s900268_01.pdf; https://etd.uum.edu.my/10564/

Issues of corporate governance are commonly debated in both academic and non-academic circles, not only in the Western context but also in the Malaysian context. Some of the issues highlighted are financial scandals, corruption, misconduct, and others. To become prestigious corporate governance, especially at Islamic Financial Institutions (IFI), leaders such as the CEO, Director, and Chairman who lead an organization need to govern the institution or Islamic Banks in an ethical, responsible and dedicated manner. Although a total of 14 principles have been outlined in the Islamic Governance Guide for licensed Islamic Banking, issues of corporate governance are still emerging. In this regard, the purpose of this study is to investigate the 14 principles of corporate governance in the Malaysian IFIs. Three objectives are outlined in this study; (1) to have an in-depth understanding of the adoption of corporate governance principles in Islamic Banks (2) to explore Islamic core values in supporting the principles of corporate governance in IFIs and finally (3) to propose a new model of corporate governance based on the Islamic core values. This study applies the qualitative method. The data was collected through data triangulation that consists of document analysis, interviews, and archival records from corporate governance key players in IFIs. For data validity, a trustworthiness method is used to ensure the findings obtained are reliable and accurate. The findings of this study indicated that the 14 principles of corporate governance need to be revised cautiously, and the principles should be supported by the nine Islamic core values to make the guidelines more comprehensive and conclusive. The nine Islamic core values consist of the caliph, tawheed, syura, Shariah compliance, FAST (Fatanah, Amanah, Siddiq dan Tabligh), justice, hisbah, ukhuwwah, and maslahah. For the benefit of academicians, practitioners, policymakers, and regulators, the thesis recommends a corporate governance model that should be adopted in all IFIs and also other institutions. Indeed, the implementation of these principles is more towards fulfilling the responsibilities towards Allah, humans, and the environment. Next, this study provides conceptual, practical, and methodological contributions as well as the limitations and directions for future research. In conclusion, to overcome corporate governance issues in Islamic Banks, 14 principles of corporate governance should be understood deeply by leaders, and hence they need to implement these principles together with Islamic Banks in an efficient, effective, and responsible way.