Table: (8): the preference for other alternatives that can be accepted for setting Sharia`h management standards in Saudi Islamic banks. Table (9): the correlation coefficient between the perceptions of the implementation of Shariah management strategies and their preference to adopt AAOIFI management standards.
Introduction
- Islamic banking sector in Saudi Arabia
- Corporate Governance in General
- Sharia`h Corporate Governance in General
- The Accounting and Auditing Organization for Islamic Financial Institutions
- Purpose and Objective of the Study
- Significance of the Study
- Research Methodology
The study has six chapters; the first chapter is an introduction of the dissertation topic, the second chapter is the literature review, the third chapter is the data and limitations of the study, the fourth chapter is the methodology and finding and the fifth and last chapter is the conclusions and recommendations.
Literature review
Review of harmonizing Standards
Albadran Badr Kaseb (2010) researched the harmonization of Shariah guidelines and practices in the Malaysian sukuk market. In this regard, the researcher attempted to examine the degree of harmony between Shariah guidelines and practices in the Malaysian sukuk market, primarily through the qualitative research technique of face-to-face interviews. The main questions were: SSB's applications before the issuance of sukuk, application after the issuance of sukuk, their involvement in the documentation, how they perform the audit and the guidelines of the Securities Commission.
As confirmed by both the literature and Sharia advisors interviewed, the research assures that regulators should review and improve current guidelines and come up with a clearer and more comprehensive sukuk guideline to facilitate and strengthen sukuk issuance in a concrete way (Kaseb, 2010). Nikhil Chandra Shil, Bhagaban Das, Alok Kumar Pramanik (2009), explored in their study Harmonization of accounting standards through internationalization. Achieving a single set of accounting and reporting standards is the question of the times.
The paper concludes with a discussion of the issues that might arise if the United States fully adopts the standards and the policy issues that might arise as a result of their adoption. The importance of international foreign equity investment opportunities by investors in the United States and the large number of foreign companies listed on various stock exchanges around the world facilitate adoption and incorporation.
Review of corporate governance and Sharia`h corporate governance
It explored different jurisdictions, namely Malaysia, the GCC countries and the United Kingdom, because these regions offer three distinct models of Sharia governance system from the regulatory overview. As Malaysia represents a model in mixed legal jurisdiction, GCC is Islamic and mixed legal environment and UK is non-Islamic legal environment. Passive approach: In this approach, there is no National Shariah Advisory Board, no institution to govern IFIs, each IFI has its own Shariah governance system instead of complying with regulatory requirements.
Minimalist Approach: This approach implements the AAIOFI standards, the main idea of this approach is to allow the market to develop its own Shariah governance system rather than institutions. The regulatory body in Malaysia is the governing body for international financial institutions and is called the Sharia Advisory Council, Bank Nigara. The conclusion was that a robust and consistent corporate governance regime in the Gulf states is still developing.
They therefore recommended the adoption of international best practice in financial measurement and disclosure, which is important for transparency and effective corporate governance in the Gulf countries. The researcher compared two models of Sharia governance framework, the first is the decentralized model in the Gulf.
Review of AAOIFI Sharia`h Governance standards adoption
Ahmed Al-Baluchi (2006) submitted a PhD thesis focusing on voluntary disclosure in the annual reports of Islamic banks in four countries: Bahrain, Sudan, Qatar and Jordan. The question was whether the requirements of the Central Bank of Bahrain (CBB) (formerly the Bahrain Monetary Authority) in relation to Islamic financial institutions result in a redundant study of compliance with the standards promulgated by the AAOIFI by Bahraini Islamic banks. The added value of the research hoped that the index for testing the compliance of Islamic banks with AAOIFI standards will be useful in facilitating the development of these standards.
In 2013, Adel, Sarea & Mohd Hanefah focused on the level of compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) accounting standards by Islamic banks of Bahrain. The paper was designed to examine the extent to which Bahrain's Islamic banks comply with AAOIFI accounting standards. The conclusion was that; Islamic banks in Bahrain are fully compliant with AAOIFI accounting standards (Adel Mohammed, Sarea Mustafa & Mohd Hanefah, 2013).
The level of compliance with Sharia'h in Islamic banks has been assessed against the standards of AAOIFI's Sharia'h governance system through "content analysis" to assess compliance. Karim Ginena (2014) released a paper designed to help directors, senior management, and stakeholders of Islamic banks understand Sharia`h risks, a critical consideration in Islamic bank corporate governance, and its impact on these banks by linking scattered insights. emerging Sharia governance literature and guidance from the Basel Committee on Banking Supervision (BCBS), the Islamic Financial Services Board (IFSB), and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) with new insights to mitigate Shariah risk clarify what Islamic banks face.
Research Methodology
- Introduction
- The study variables
- Study's society and environment
- The study sample
- Data collection methods
- Methods of Data Analysis
- Descriptive Statistics
- Validity and reliability
Table (2): statistical standard used in the application of the AAOIFI standards for corporate governance of Islamic banks in Saudi Arabia. As well as being ratified the internal consistency of the questionnaire (Structural Validity) by calculating Pearson Relationship coefficients between the application of the accounting and auditing standards of Islamic financial institutions in the Islamic banking sector in Saudi Arabia and the questionnaire. Second: the importance of adopting mandatory legal standards for governance in Islamic banks in Saudi Arabia.
It appears from Table (3) that all correlation coefficients with the total degree of the dimension they belong to are statistically significant at a level of 0.01, and shows that the correlation coefficient values for all sentences with the total degree of the axes range from positive ( 0.340 and. As well as what has been ratified, the internal consistency of the questionnaire (Structural Validity) by calculating Pearson Relationship coefficients between the application of the accounting and auditing standards of Islamic financial institutions in the Islamic banking sector in Saudi Arabia and ( Search Axes) and the overall mean of all questionnaire statements and the correlation coefficients were as shown in Table (4) which shows that the correlation coefficients were significant at a standard level of (0.01) and this indicates that the research axes are related to each other and the measurement is valid for what it was set to.Table (4) shows that all correlation coefficients with the overall degree of the dimension they belong to are statistically significant at the 0.01 level, showing that correlation coefficient values for all sentences with the total degree of the axes from positive (0.863 and.
And this coefficient depends on measuring the extent of the internal consistency of the questionnaire questions, which ranges from (zero to 1), so the researcher calculates the reliability coefficient of each sentence in the search sentences individually, and then calculates the stability of the whole measure as shown in table (5 ). We can conclude that the search tool met the psychometric requirements for the good test and they serve the purpose of the research.
Analysis of the results and their interpretation and discussion
Conclusion
This chapter provided a comprehensive analysis of the results of the survey, which was conducted to investigate the respondents' perceptions of the adoption of AAOIFI governance standards in Saudi Islamic banks. The following are the most important findings of the analysis carried out throughout this chapter;. There were statistically significant differences between the perceptions of execution strategies with Islamic Shariah legalization and preference for adopting the Accounting and Auditing Organization standards at the level of statistically significant (0.01 = α), where Chi-square was (1000.44) when the value of the probability (0.00), and the Pearson correlation coefficient was (0.863) which led to the rejection of null hypothesis.
There is no relationship between perceptions of execution strategies with the provisions of the Islamic law and the preference for the adoption of the Accounting and Auditing. There was a statistically significant positive correlation between Participants' perceptions about the effects of management standards of the correspondent corporate and Sharia and preferences of adoption of Accounting and Auditing Organization Management Standards at the level of statistical significance (0.01 = α)., where Chi- square was (900.96) when the value of the probability (0.00) and the correlation coefficient Pearson value (0.480) lead to the rejection of the null hypothesis.
Conclusions and Recommendations
- Introduction
- Summary of the research
- The effect of implementing some governance strategies in their confidence in Islamic
- The importance of adopting Sharia`h governance standards in the Saudi Islamic
- Preferences of alternatives that might be adopted for setting Sharia`h Governance
- Testing hypotheses
- Recommendations
- Suggestions for Further Research
- Limitations of the Study
The result presented in Chapter 4 shows a high rate indicating that the respondents' tendencies were very positive in adopting Sharia'h governance standards in the Saudi Islamic banks. To what extent does harmonization of Sharia'h Governance standards positively impact trust in Islamic banks. Do people in Saudi Arabia support the idea of adopting the Accounting and Auditing Organization's governance standards in Islamic banks.
The main findings of the study presented above provide a base of recommendations to increase trust in Saudi Islamic banks. To achieve the research objectives, a set of the two part questionnaire was designed, the first part consists of (10) questions to examine the effect of implementing some management strategies on participants' trust in Islamic banks, the second part consists of (9 ) questions to examine the importance of adopting Sarah governance standards in the Saudi Islamic banks. What is the importance of implementing a generally accepted corporate governance standards to influence the trust of Islamic banks.
Do you think that the application of Shariah governance standards in Saudi Islamic banks could help achieve the following objectives? What is your preference regarding the other alternatives that could be adopted to determine the Shariah standards of governance of Saudi Islamic Bank.
