The Role of Governance Integrity in Islamic Banking; (with Emphasis on the Legal System of the Islamic Republic of Iran and Malaysia)

Document Type : Iranian National Islamic Banking Conference - Melli Bank Study Center

Authors
Ali Allahyarifard 1
Mahmood Ganjbakhsh 2
1 PhD Student, Public Law, Faculty of Law and Political Science, Tehran University, Tehran, Iran
2 Assistant Professor, Faculty of Literature and Humanities, Kharazmi University, Tehran, Iran
10.30497/ifr.2023.244139.1769
Abstract
Realizing the basic principles of Islamic banking and implementing the basic rules and regulations of conventional banking make an absolute generality and peculiarity relationship, because Islamic banking is rooted in human nature and ethics, and its principles are not separated from those of reason and moral rules accepted by all the involved thinkers. The main question is what principles the legal system of governance fitting with Islamic banking and the goals of the Holy Sharia should include. The purpose of this article is to present the role of governance integrity in the realization of real Islamic banking, focusing on the banking system of the Islamic Republic of Iran and Malaysia. Descriptive analysis and that of the findings and concepts have been done with qualitative content analysis method through library information collection. According to the selected hypothesis, all conventional banking regulations that are to protect the rights of individuals and morals should be applied. Failure to apply prior and subsequent desirable supervision by the competent institutions mentioned in the constitution and other laws resulting in the divergence of Islamic banking governance reference laws and executive instructions, excluding some institutions from supervision by the laws approved by the governing bodies, violation of the decrees issued by the regulatory body about banking and lacking in the required expertise in Islamic banking knowledge are among the factors that prevent the implementation of true Islamic banking based on ethics in the society. It is, therefore,  suggested that governments and international organizations work out some agreements on how to apply the legal system related to supervision and compliance in common banking issues.
Keywords
Governance
Corporate Governance
Implementation
Conventional Banking
Islamic Banking
Iran
Malaysia
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  • Receive Date 06 January 2023
  • Revise Date 10 February 2023
  • Accept Date 23 April 2023