Syed Ahmed Salman

Conceptual framework for Shari'ah corporate governance with special focus on Islamic capital market in Malaysia

Corporate governance issue emerged with the birth of the corporations. Similarly, the need for Shari’ah corporate governance is given attention by the regulators, industrial players, Shari’ah advisors and researchers with the bloom of Islamic finance. There are limited literature and Shari’ah governance guidelines available for Islamic financial institutions. The existing guidelines are general and they not as specific as conventional guidelines. In addition, there is no Shari’ah governance guideline for Islamic capital market in Malaysia. Therefore, this paper aims to propose conceptual framework for Shari’ah corporate governance with special focus on Islamic capital market by integrating the conventional concepts of governance. We believe that the concept of Islamic accountability, independency, competency and transparency should be the basic foundation in developing the conceptual framework for Shari’ah corporate governance.

Quantitative Analysis on the Correlation between Risks: Empirical Evidence from Banks in United Kingdom

Financial institutions or banks are faced with several types of risks that are uniquely related to the nature of the industry. Therefore it is a must for banks to have risk mitigation methods in order to maintain its competitiveness and sustainability. For the purpose of this paper, four unique risks related to the banking industry will be discussed, as well as to provide empirical study on the relationship between these risks. These risks are liquidity risk, operational risk, credit risk and market risk. The focus of this study is on ten listed banks in United Kingdom with complete secondary data from the year 2002 to 2011. Liquidity risk is measured by the ratio of total loans to total deposits, operational risk is calculated based on two ratios, i.e. the ratio of operating expenses to total assets and the ratio of non-performing loans to total loans. Credit risk is based on the probability of default based on Altmans z score equation and market risk is calculated based on the standard deviation of quarterly stock returns. The findings show the evidence that there is a relationship between tested risk and it is expected that the findings will be the interest of the bankers to see which risk is the source of other risks.

Shari"ah and Ethical Issues in the Practice of the Modified Mudharabah Family Takaful Model in Malaysia

Takaful has been known as Shari’ah compliant insurance and it is penetrating not only into the Muslim countries but also into the non-Muslim countries. Among the countries which offer Islamic finance products, Malaysia is well known as one of the leading countries encouraging this industry. Due to the rapid growth of the takaful industry, the prevailing guidelines and regulations might not be adequate to capture the current needs of takaful operations. Thus, the practice of takaful industry has been criticized from the Shari’ah and ethical aspects. It is important to examine these main issues because Shari’ah compliance and ethicality are the distinguishing factors that make takaful different from conventional insurance. We also believe that if these issues are not resolved, the participants and the investors will lose the confidence in the takaful industry and consequently, it will hinder the growth of takaful industry. This paper focuses on the Shari’ah and ethical issues in the modified mudarabah model used in family takaful products. They are related to profit (surplus) sharing practice and the usage of interest free loan. The findings of this paper reveal the existence of unfavorable Shari’ah and ethical issues in the practice of takaful operation in Malaysia. Therefore, we suggest that the regulators, Shari’ah advisors and industrial players should revisit on these issues in order to avoid reputational risk, Shari’ah compliant risk and early termination risk.