Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?

Islamic banks cannot promise to pay fixed rate of return to the depositors although they are trying to pay at least the same rate of return provided by the conventional banks. Changes in interest rate put additional pressure on the Islamic banks to compete with the conventional banks. One way to com...

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Main Authors:	Htay, Sheila Nu Nu, Syed, Ahmed Salman
Format:	Article
Language:	English
Published:	International Journals of Multidisciplinary Research Academy (IJMRA) 2013
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/32026/ http://irep.iium.edu.my/32026/ http://irep.iium.edu.my/32026/1/CAN_TRANSPARENT_DISCLOSURE_BE_THE_SOLUTION_TO_RESOLVE_SHARI%E2%80%99AH_AND_ETHICAL_ISSUES_IN_SPECIAL_RESERVES_OF_ISLAMIC_BANKS_IN_MALAYSIA.pdf

id	iium-32026
recordtype	eprints
spelling	iium-320262013-09-25T08:05:21Z http://irep.iium.edu.my/32026/ Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia? Htay, Sheila Nu Nu Syed, Ahmed Salman HG1501 Banking Islamic banks cannot promise to pay fixed rate of return to the depositors although they are trying to pay at least the same rate of return provided by the conventional banks. Changes in interest rate put additional pressure on the Islamic banks to compete with the conventional banks. One way to compete the rate provided by the conventional banks is to reserve some portion of profit to cover in the case of incurring losses from the investment. In Malaysia, Islamic banks are allowed to keep profit equalization reserve and investment rate reserve. However, there is no research has been done to examine any Shari’ah issues regarding these reserves. Therefore, this research focuses on these issues. The findings show that these issues are arisen due to using conventional rate of return as benchmark and deviation of the practice of these reserves from the original concepts of profit and loss sharing concept applied in the Islamic banks, negative impacts on zakat and income tax and no harmonization and standardization on the practices. It is believed that these issues can be solved and valid from the ethical and Shari’ah aspects investment account holders are well informed about these reserves and they agree on these practices. We expect that these issues should be revisited by the Shari’ah scholars, industrial players and regulators to ensure that all the involved parties are treated fairly. International Journals of Multidisciplinary Research Academy (IJMRA) 2013 Article PeerReviewed application/pdf en http://irep.iium.edu.my/32026/1/CAN_TRANSPARENT_DISCLOSURE_BE_THE_SOLUTION_TO_RESOLVE_SHARI%E2%80%99AH_AND_ETHICAL_ISSUES_IN_SPECIAL_RESERVES_OF_ISLAMIC_BANKS_IN_MALAYSIA.pdf Htay, Sheila Nu Nu and Syed, Ahmed Salman (2013) Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia? International Journal of Marketing and Technology, 3 (9). pp. 233-246. ISSN 2249-1058 http://www.ijmra.us/2013ijmt_september.php
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Htay, Sheila Nu Nu Syed, Ahmed Salman Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?
description	Islamic banks cannot promise to pay fixed rate of return to the depositors although they are trying to pay at least the same rate of return provided by the conventional banks. Changes in interest rate put additional pressure on the Islamic banks to compete with the conventional banks. One way to compete the rate provided by the conventional banks is to reserve some portion of profit to cover in the case of incurring losses from the investment. In Malaysia, Islamic banks are allowed to keep profit equalization reserve and investment rate reserve. However, there is no research has been done to examine any Shari’ah issues regarding these reserves. Therefore, this research focuses on these issues. The findings show that these issues are arisen due to using conventional rate of return as benchmark and deviation of the practice of these reserves from the original concepts of profit and loss sharing concept applied in the Islamic banks, negative impacts on zakat and income tax and no harmonization and standardization on the practices. It is believed that these issues can be solved and valid from the ethical and Shari’ah aspects investment account holders are well informed about these reserves and they agree on these practices. We expect that these issues should be revisited by the Shari’ah scholars, industrial players and regulators to ensure that all the involved parties are treated fairly.
format	Article
author	Htay, Sheila Nu Nu Syed, Ahmed Salman
author_facet	Htay, Sheila Nu Nu Syed, Ahmed Salman
author_sort	Htay, Sheila Nu Nu
title	Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?
title_short	Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?
title_full	Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?
title_fullStr	Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?
title_full_unstemmed	Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?
title_sort	can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of islamic banks in malaysia?
publisher	International Journals of Multidisciplinary Research Academy (IJMRA)
publishDate	2013
url	http://irep.iium.edu.my/32026/ http://irep.iium.edu.my/32026/ http://irep.iium.edu.my/32026/1/CAN_TRANSPARENT_DISCLOSURE_BE_THE_SOLUTION_TO_RESOLVE_SHARI%E2%80%99AH_AND_ETHICAL_ISSUES_IN_SPECIAL_RESERVES_OF_ISLAMIC_BANKS_IN_MALAYSIA.pdf
first_indexed	2023-09-18T20:46:12Z
last_indexed	2023-09-18T20:46:12Z
_version_	1777409691757838336

Can transparent disclosure be the solution to resolve shari’ah and ethical issues in special reserves of Islamic banks in Malaysia?

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