Abstract:

The renaissance of Islamic finance indicates that people are increasingly concerned with the shari’ah-complaint nature of commercial and non-commercial activities. Conventional financial institutions are immersed in elements of interest, uncertainty, and gambling, all of which are forbidden in Quran and sunnah. Shari’ah-complaint finance is thus at the core of Islamic financial institutions; it is the distinguishing factor between Islamic and conventional finance. With due diligence, international organisations such as the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), Islamic Financial Services Board (IFSB), and Bank Negara Malaysia (BNM) have formulated a shari’ah governance framework; Malaysia is thus positioned at the centre of the global Islamic finance and takaful industries. The shari’ah governance framework monitors Islamic financial institutions with regards to their functioning within the framework of the shari’ah. Current research on shari’ah governance mainly focuses on financial practices within profit-oriented organisations (i.e. Islamic banks, takaful, and Islamic capital markets).