Corporate Governance and Stakeholders’ Financial Interests in Institutions Offering Islamic Financial Services

Corporate Governance and Stakeholders’ Financial Interests in Institutions Offering Islamic Financial Services

This paper focuses on the corporate governance arrangements of institutions offering Islamic financial services (IIFS) aimed at protecting stakeholders' financial interests. Many IIFS corporate governance issues are common with those of their conventional counterparts. Others are distinctive. I...

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Bibliographic Details
Main Authors: Grais, Wafik, Pellegrini, Matteo
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2012
Subjects:
ACCOUNTING
ACCOUNTING STANDARDS
ACQUISITION
ASSETS
AUDITING
AUDITORS
BALANCE SHEET
BANK GUARANTEES
BANKING LAW
BANKING SUPERVISION
BANKS
BORROWING
CAPITAL ADEQUACY
CAPITAL MARKETS
CAPITAL REQUIREMENTS
CENTRAL BANKS
CONFLICT OF INTEREST
CONTROLLING SHAREHOLDERS
CORPORATE CONTROL
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE CODE
CORPORATE STRUCTURE
CORPORATE TAKEOVERS
DEPOSITS
DISCLOSURE
DIVIDEND PAYMENTS
DIVIDENDS
EQUALIZATION
EXPROPRIATION
FEDERAL DEPOSIT INSURANCE
FEDERAL DEPOSIT INSURANCE CORPORATION
FINANCIAL ACCOUNTING
FINANCIAL INDUSTRY
FINANCIAL INFORMATION
FINANCIAL INSTITUTION
FINANCIAL INSTITUTIONS
FINANCIAL INSTRUMENTS
FINANCIAL INTERMEDIARIES
FINANCIAL INTERMEDIATION
FINANCIAL MARKETS
FINANCIAL PERFORMANCE
FINANCIAL REPORTING
FINANCIAL SERVICES
FINANCIAL STATEMENTS
FINANCIAL SYSTEMS
FINANCIAL TRANSACTION
FRANCHISE
FREE BANKING
GOLDEN SHARES
HOSTILE TAKEOVERS
INDEPENDENT DIRECTORS
INSTITUTIONAL INFRASTRUCTURE
INTERESTS OF MINORITY SHAREHOLDERS
INTERNATIONAL BUSINESSES
INVESTMENT DECISIONS
INVESTMENT POOLS
INVESTMENT PORTFOLIO
INVESTMENT RISK
INVESTMENT RISKS
INVESTMENT SERVICES
ISLAMIC BANK
ISLAMIC BANKING
LAWS
LEGISLATION
LEVEL PLAYING FIELD
LIMITED
LIQUIDITY
MANAGERS
MANDATES
MARKET DISCIPLINE
MARKET INSTITUTIONS
MARKET RISK
MERGER
MUTUAL FUNDS
NON-BANK
OPEN INTEREST
OPERATIONAL RISK
OWNERSHIP STRUCTURE
PAYMENT SYSTEMS
PRIVATE EQUITY
PROFIT SHARING
PROFITABILITY
PROTECTION OF MINORITY SHAREHOLDERS
RATING AGENCIES
REGULATORY AUTHORITIES
REGULATORY FRAMEWORK
REGULATORY INSTITUTIONS
REGULATORY REGIME
REGULATORY SYSTEMS
RESERVE BANK OF INDIA
RESERVE REQUIREMENT
RETAINED EARNINGS
RISK MANAGEMENT
RISK SHARING
SAVINGS
SAVINGS ACCOUNTS
SECURITIES
SECURITIES REGULATION
SECURITIES REGULATOR
SEPARATION OF OWNERSHIP
SEPARATION OF OWNERSHIP FROM CONTROL
SHAREHOLDER
SHAREHOLDERS
SOCIAL SERVICES
SPECIFIC INVESTMENTS
STAKEHOLDER
STAKEHOLDER PROTECTION
STAKEHOLDERS
STATEMENT
STOCK OPTIONS
STOCKHOLDERS
SYSTEMIC BANKING CRISES
TAKEOVER
TAXATION
TRANSPARENCY
VOTING SHARES
Online Access:http://documents.worldbank.org/curated/en/2006/11/7157793/corporate-governance-stakeholders-financial-interests-institutions-offering-islamic-financial-services
http://hdl.handle.net/10986/9028
Description
Summary:This paper focuses on the corporate governance arrangements of institutions offering Islamic financial services (IIFS) aimed at protecting stakeholders' financial interests. Many IIFS corporate governance issues are common with those of their conventional counterparts. Others are distinctive. In particular they offer unrestricted investment accounts that share risks with shareholders but without a voting right. This paper first reviews internal and external arrangements put in place by IIFS to protect stakeholders' financial interests. It discusses shortcomings notably in terms of potential conflict of interest between shareholders and holders of unrestricted investment accounts. It then suggests a corporate governance framework that combines internal and external arrangements to provide safeguards to unrestricted investment account holders without overburdening IIFS' financial performance. The paper uses a review of 13 IIFS and regulatory information from countries where IIFS have developed the most.

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