What is it about?
The paper examine the practices of Islamic banks in managing the so called profit sharing investment accounts (PSIA) which they offer as a Shari’ah-compliant alternative to interest-bearing deposit accounts using an unrestricted Mudarabah contract.
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Why is it important?
There is a dearth of empirical studies of the practices of Islamic banks and in particular of their treatment of their customers. This is because of various factors: the relative novelty of Islamic finance, the paucity of data and the relatively small size of the body of researchers in the field. This paper aims to contribute to filling this gap.
Perspectives
I hope this article makes people understand and raised some important corporate governance issues regarding the fair treatment of investors in Islamic banks especially unrestricted investment account holders (UIAHs), given their lack of governance rights. As the paper aims to examine the risk-return characteristics of such accounts and to compare these to the returns and risks of shareholders in the same banks. The results have policy implications and should help the supervisory authorities or central banks better to understand how Islamic banks are treating UIAHs, which may also help them to evaluate the current CG standards and practices.
Dr. Salah Alhammadi
Gulf University for Science and Technology
Read the Original
This page is a summary of: Perspective of corporate governance and ethical issues with profit sharing investment accounts in Islamic banks, Journal of Financial Regulation and Compliance, July 2018, Emerald,
DOI: 10.1108/jfrc-01-2017-0014.
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