Research Article

EFFECT OF SHARI'AH REVIEW AND FATAWA ON PRODUCT DEVELOPMENT OF NON INTEREST FINANCIAL INSTITUTIONS IN NIGERIA

Aisha Mahmoud HAMMAN1*
1 Department of Accounting, Ahmadu Bello University, Zaria
* Corresponding author: amhamman@abu.edu.ng
Published: Dec, 2016
Pages: 1-19
Views: 122
Downloads: 69

Abstract

The objective of the study is to evaluate the effect of Shari'ah Review and Fatawa on product development of Islamic banks in Nigeria. The data is survey in nature while primary data was employed using questionnaires to collect data. Multiple regression was used as a tool of analysis. It was found that Shari'ah review significantly affects product development positively. This implies that the more Shari'ah review is conducted the better the product development process. Fatawa on the other hand has a positive but not significant effect on product development in this study. This implies that asignificant impact could be anticipated in the long-run based on improved method of issuing fatawa during product development of NIFIs in Nigeria. It is therefore recommended that Shari'ah review should be upheld by Shari'ah advisors while increasing tight controls so that economic objectives do not overshadow Shariah compliance. The process of issuing fatawa on the other hand should be revisited by scholars to harmonise the way fatawas are issued while Advisory Committee of Experts (ACE) should ensure that products maintain the form, essence, spirit and implications of Shari'ah before issuing fatawa since fatawa is indispensable.

Keywords

Shari'ah Review Fatawa Product Development Islamic banks.

References

  1. AAOIFI (1999) Governance Standard for Islamic Financial Institutions No.2 Shari'ah Review.
  2. Abozaid, A.A. (2012). The Methodology of Product Development Needed for Islamic Banks Upholding Social Responsibility, International Conference on Business Ethics and Corporate Social Responsibility: Ideals and Realities, Istanbul and Durham Centre for Islamic Economics and Finance, Durham University, UK, 12th-14th April.
  3. Ahmed, H. (2011). Product Development in Islamic Banks, First Edition, Edinburgh University Press, USA.
  4. Ahmed, H. (2014). Islamic Banking and Shari'ah Compliance: A Product Development Perspective, Journal of Islamic Finance, 3(2), IIUM Institute of Islamic Banking and Finance. Durham University Business School, The United Kingdom.
  5. Al-Sadah, A. K. I. (2007).Corporate Governance of Islamic Banks, Its Characteristics and Effects on Stakeholders and the Role of Islamic Banks Supervisors, PhD Thesis submitted to the School of Management, University of Surrey, Guildford, United Kingdom.
  6. CBN (2015). Guidelines on the Governance of Advisory Committees of Experts for Non-Interest (Islamic) Financial Institutions in Nigeria. Financial Policy & Regulation Department Central Bank of Nigeria, Abuja, February 20th.
  7. Gambling, T., Jones, R., & Karim, R. A. A. (1993). Credible Organization: Self-Regulation vs. External Standard-Setting in Islamic Banks and British Charities", Financial Accountability and Management, 9(3), 207, August.
  8. Greuning, V.H., & Iqbal. Z. (2008). "Risk Analysis for Islamic Banks", The World Bank Washington, D.C.
  9. Hisham, M. K. (2015). What is Fatawa? Islamic Supreme council of America.
  10. IFSB, (2009). Guiding Principles on Shari`ah Governance Systems for Institutions Offering Islamic Financial Services, December.
  11. Jakobsen, K. & Andreasen, M.M. (1994). The Product Development Process, European Aluminium Association, TALAT Lecture 2100.
  12. Jaiz Bank (2014) Annual Reports, Jaiz International Plc
  13. Jaiz Bank (2015) Annual Reports, Jaiz International Plc
  14. Karim, R. A. A. (1990). The Independence of Religious Auditor and External Auditor: The Case of Islamic Banks, Accounting, Auditing and Accountability Journal 3(3), 34-44.
  15. Lahsasna, A. & Hassan, M.K. (2012). The Shari'ah Process in Product Development and Approval in Islamic Capital market: Products and Strategies, John Wiley & Sons, Inc. Hoboken, NJ, USA.
  16. Laldin, M.A (2012). The Role of Shari'ah Advisors in the Development of Islamic Securities, 2nd colloquium on Islamic Sukuk, IICIF.
  17. Muda, M & Jalil, A. (2007). Islamic Financial Product Development: Shari'ah analysis. International conference on Islamic banking and finance, IIUM.
  18. Mollah, S. & Zaman, M. (2015). Shari'ah supervision, corporate governance and performance: Conventional vs. Islamic banks, Journal of Banking & Finance, 58, June, 418–435.
  19. Ross, D. A. & Vaughan, J.P. (1987). Health Interview Surveys in Developing Countries: A Methodological Review, Population Council, 17(2), 78-94.
  20. Rini, R. (2014). The effect of Audit Committee Role and Sharia Supervisory Board on Financial Reporting Quality at Islamic Banks in Jakarta, Indonesia. Journal of Economics Business and Accountancy, Ventura 17(1) 145-156.
  21. Safieddine, A. (2009). Islamic financial institutions and corporate governance: New insights for agency theory. Corporate Governance: An International Review 17, 142–158.
  22. Soualhi, Y. (2015) Application of Shari'ah contracts in contemporary Islamic finance: A maqāṣid perspective, Intellectual Discourse, 23: Special Issue (2015) 333-354.
  23. Shafii, Z., Salleh, S., Shahwan, S. (2010). Management of Shariah Non-Compliance Audit Risk in the Islamic Financial Institutions via the Development of Shariah Compliance Audit Framework and Shariah Audit Programme. Kyoto Bulletin of Islamic Area Studies, 3(2) 3–16
  24. SGF, (2010). Shari'ah Governance Framework Bank Negara Malaysia http://www.bnm.gov.my/guidelines/05_shariah/02_Shariah_Governance_Framework_20 101026.pdf. Retrieved on 5/1/2015.
  25. Usmani, T. (2007). Sukuk and their Contemporary Applications, available at http://www.failaka.com/customer/resources.html
  26. Wardhany, N. & Arshad, S. (2012). The Role of Shari'ah Board in Islamic Banks: A case study of Malaysia, Indonesia and Brunei Darussalam,Islamic Finance in a Challenging Economy: Moving Forward, Bank Negara Malaysia.
How to Cite

HAMMAN, A. M. (2016). EFFECT OF SHARI'AH REVIEW AND FATAWA ON PRODUCT DEVELOPMENT OF NON INTEREST FINANCIAL INSTITUTIONS IN NIGERIA. Nigerian Journal of Accounting Research, 12(2), 1-19.

A. M. HAMMAN, "EFFECT OF SHARI'AH REVIEW AND FATAWA ON PRODUCT DEVELOPMENT OF NON INTEREST FINANCIAL INSTITUTIONS IN NIGERIA," Nigerian Journal of Accounting Research, vol. 12, no. 2, pp. 1-19, December 2016.

Share this article:
Facebook X / Twitter LinkedIn
Download PDF Back to Articles