Islamic banking (IB) is a rapidly growing sector within the global financial system with annual growth of nearly 15%. IB or Shari’ah banking as an alternative mode of banking to the conventional banking is not only restricted to Muslim societies. In particular, after the financial crisis during 2008-2009 when Shari’ah compliant assets passed the resilience test, the operations of IB has increased and geographically expanded to many countries. Today more than 500 institutions spread over globally are practicing Islamic banking and finance. Nevertheless, Islamic banking (IB) is still rather a smaller player compared to the conventional banking. One of the limitations is that IB product range is small compared to conventional banking, because IB products are restricted to remain within the tenets of Shari’ah and must follow the maqasid al- Shari'ah or the objectives of Shari’ah. Development of new products in IB hence is essential for the growth and sustenance of the sector. Therefore, conducting an in-depth study on the product development processes (PDP) in Islamic banks is a matter of academic interest with practical and professional implications. This research, hence, is a product of such motivational factors, which aimed at exploring the PDP through the opinions of participants working in relevant departments of full-fledged Islamic banks and Islamic windows in a number of countries through a questionnaire survey. By aiming that, this research surveyed 22 banks from 8 countries in South East Asia and GCC which are the main hubs of IB today. The survey was conducted through a structured questionnaire, which covered main pillars of PDP including strategy, resources, processes and Shari’ah approval processes. A special focus was given to trade financing products to have a product level deeper understanding. The research findings enabled a deeper understanding of the product development processes among Islamic banks. First, the broad finding indicated that though most of the banks' overall strategy and mission-vision statements talked about innovation at high level, but at the implementation level the focus were diluted. As per the findings 95% of the banks overall strategy agreed for innovation but only 50% banks allocated budget and 63% of banks put target for number of new products to be developed. Hence, as indicated by this study, the Islamic banks were in general slow on giving priority towards the development of new products. Second, the deeper findings of the study revealed that the strategies of product development are not standard among the Islamic banks, as various factors influence the product development. First geographical location is an important factor that influences the PDP. Second the nature of IB business (full-fledged or Islamic window) plays a role. Similarly the age, size and ownership structure of the Islamic bank are also important factors of influence in PDP. As examples, the strategies and product development processes in Malaysia vary with Bangladesh and that in GCC; the Islamic windows of conventional banks show significantly different results in developing new Islamic products compared to full-fledged Islamic banks. By emphasizing that larger product range is a critical success factor of growth for IB, this research provides a valuable contribution to the deeper understanding of PDP in Islamic banks.

Drawing from work found in the financial innovation literature, the main objective of this research is to explore the effect of religious orientation towards financial innovation and engineering in Islamic Financial Institutions (IFIs). The research also examines what constitutes this religious orientation and how it is enacted in the innovation process. Religious orientation towards financial innovation is conceptualised and defined, as a system, in this research study. In order to achieve this objective, the study employs multiple theoretical perspectives to develop its theoretical framework. It combines innovation orientation theory with the theory on boundary objects to explore the role of religion in the financial innovation processes in IFIs. Religious orientation towards financial innovation and the role of Shariah as a shared boundary object is portrayed as a multidimensional knowledge and philosophical structure. This qualitative study provides two important theoretical contributions to existing theories in the innovation literature. First, it extends the existing literature of innovation orientation to a completely new field and construct that is based on a religious imperative as a framework within which financial innovation is constrained. It explains how an innovation orientation in IFIs can be directed within religious rules, which indicates that innovation orientation in IFIs is a learning philosophy. Second, the research introduces and examines the plasticity of Shariah as a shared boundary object and its dynamic role in managing tension and conflicting values in the financial innovation process. Furthermore, building on the empirical results, the study illustrates the insights that each theoretical lens affords into practices of collaboration and develops a novel analytical framework for understanding religious orientation towards financial innovation. This practical contribution, of the developed framework, could form the basis for a standardised framework for the Islamic finance industry. The study concludes by noting the policy and managerial implications of its findings and provides directions for further research.

The establishment and operation of Islamic banking and finance is governed by Shari’ah principles. These specific underlying principles give a new dimension to its governance structure, which is known as Shari’ah Governance. The aim of this research is to examine the theoretical and practical aspects of problems and challenges facing Islamic banking and finance in Malaysia. The study focuses on four main issues: legal and regulatory framework, Shari’ah compliance, management, and accounting. In order to achieve the objectives, this study surveys different groups of respondents who are involved in the operation of Islamic banking and finance, using semi-structured interviews. The key respondents are members of the Shari’ah Committee, Shari’ah Officers and Chief Executive Officers (CEO). The major problems and challenges which emerged from the interview findings are the influence of the dual-banking environment, lack of support from the regulatory framework related to products and services, Shari’ah non-compliance, operation and management, lack of expertise in human capital, lack of accountability, and lack of influence of accounting practices and auditing. The majority of key respondents explicitly highlighted these findings. According to agency theory, accountability is the primary corresponding function for decision making in the banking system; however, this does not appear to be transparent in the Islamic banking sector. As in most contexts of Islamic banking, inadequate accounting practices are also considered to be the major challenge that Islamic banking face. Regarding this challenge, the Islamic banking system has not achieved the ultimate objective in implementing Shari’ah in the banking system. However, with constraint and uncertainty, several efforts have been made to achieve a homogeneous structure. Radical innovation of accounting practices that support Shari’ah could be the alternatives to assist the Islamic banking system to become more efficient and effective. Theories such as agency theory, stakeholder theory and institutional theory could serve as pillars to support the implementation in order to enhance Shari’ah activities. In addition, the explanation of agent morality of the stakeholder model is also important, as Islamic banking personnel need to uphold Shari’ah principles and commercial viability. Furthermore, institutional theories are employed in the explanation of the organisational behaviour of IBs.

This thesis critically explores the reflexivity and resistance of Indonesian Islamic Financial Institutions (IIFIs) towards International Accounting Standards Board (IASB) and Accounting and Auditing Organisation of Islamic Financial Institutions (AAOIFI) financial reporting standardization projects. The motivation of this study derived from two conflicting arguments as to whether or not Islamic financial institutions require specific financial reporting standards to accommodate their specific Islamic finance transactions. Most of the financial reporting researches adopt a narrative approach in their attempt to answer the ‘Why’ question, but neglect further investigation to respond to the ‘What is going on here?' question. This thesis fills the gap by answering the latter question and unveiling doubts on the required financial reporting standards for IFIs as well as the IIFIs and suggesting way forward for an enhanced stability of the global financial systems, through harmonization of financial reporting regimes. The data of this study was collected from semi structured interviews with 32 participants who are well versed with the knowledge on financial reporting standardization projects for IFIs/IIFIs, Shariah issues, and public policy. One of the chapters employs secondary data from conceptual framework and financial reporting standards issued by IASB, AAOIFI, and Indonesian standard setter. The aspect of reflexivity is examined on the extent of IFRS and AAOIFI adoptions by the IIFIs. It begins with the development of IASB and its promoting journey of IFRS that contains political lobbying in the Indonesian institutional arena. Likewise, the aspect of resistance towards AAOIFI is revealed through exploration of the institutional arena that reflects dissimilar finding with that of IFRS. The study involves not only conventional political discourse but also Islamic political interaction that influences the future of Islamic based financial reporting standardization. In other facet, an analysis of the three reporting standards using Maqāsid ul-Shari’āh lens supports the early assumption on the need of a specific financial reporting for the IIFIs. As a way forward, International Islamic Financial Architecture (IIFA) institutions are also examined to explore what supports required to have Islamic based financial reporting standards for IFIs in general and for the IIFIs in specific. The thesis makes four main contributions, both to theories and literatures. Firstly, it shows how the hegemonic political economy of accounting exists within the area of financial reporting standardization, which is not simply by identifying the types of isomorphism that influence the organizations’ involvement in the financial reporting standardization. Secondly, in the context of Islamic financial institutions, the different interpretations of Shariah very much dominate in determining the direction of IFIs towards the implementation of Islamic based financial reporting due to the political influence in the respective countries where Islamic finance operates. Hence, the thesis proposes “Islamic Political Economy of Accounting” as a new theoretical framework to analyse similar discourse. Standard setters and regulators of IFIs are required to be tactful when looking into this issue. Thirdly, as the Islamic finance industry is now at continuous growth and maturity while also facing rising challenges, there must be a different approach to regulate the financial reporting standards. The hybrid way may not be appropriate any longer. This is shown in the analysis of the contents of the standards, where low level of Maqāsid ul- Shari’āh compliance is apparent. Lastly, this thesis also constructs an assumption about the attitude of dominant political leading countries towards the development of Islamic finance. As there is currently no real leadership in the area of Islamic finance, it would require influences from dominant leaders with congregated visions and a mission in line with Islamic values.

Islamic banking system is one of the fastest growing segments of the international financial industry. This system has been receiving a growing attention nowadays especially after the global financial crisis which gave Islamic banks an opportunity to prove their resilience and contribution to financial and economic stability. The beginning of the Islamic banking in its contemporary mode was in the sixties of the past century by the first modern Islamic banking experiment which was undertaken in Egypt in 1963 by Ahmad Al-Najjar. Islamic financial institutions are established to operate commercial banking activities within an Islamic teaching perspective which depends on the elimination of any prohibited element in Islamic Shariah jurisprudence such as interest, gambling, speculation, dealing in pork or alcohol. The very distinct nature of Islamic banking led to a growing interest in determining the success factors of such type of banks especially that in most of the cases they operate with conventional banks vis a vis within the same market and sometimes under the same regulatory framework. The aim of this research is to make a comparative study between the performance of Islamic banks and conventional banks in the Egyptian financial market. The study is an attempt to determine the internal and external contingent factors that affect the profitability of Islamic banks in Egypt in comparison to conventional banks while taking into consideration the fact that both types of banks operate under the same rules and regulations. The goal is to discover whether the different nature of operations between the two types of banks is likely to affect their determinants of performance. The main motivation for undertaking this research is to fill the gap in literature and provide some information that might benefit both academics and practitioners in this field. A thorough revision of the literature suggested contingency perspective as the most suitable and appropriate theoretical framework for this type of research (Thomas, 1991; Schweikart, 1985; Otley, 1980). Data were gathered in this research through the collection of annual financial reports for the two Islamic banks working in Egypt and a sample of eleven conventional banks registered in the stock market. The study covered the period from 2002 to 2010. The findings indicate that in general, the performance of conventional banks in Egypt outweighed that of their Islamic counterparts. Moreover, it can be concluded from the results of the study that there are differences between the profitability determinants of Islamic banks and conventional banks. And eventually, it can be inferred that the nature of operations has an effect on the determination of profitability in Islamic banks and conventional banks.

Enlightenment discourse advanced an idiosyncratic cognitive framework and epistemology that rationalized the overturning of usury laws. Under capitalism, money innately changed as banks gained the institutional right to create credit and lend it into existence at interest. The implicit ideologies of this discourse instantiated a reframing of traditional conceptions about money and interest worldwide. In contradistinction, Islam prohibits riba, a term approximated as usury/interest, presenting ethical problems to banking practice. This conflict has yielded Islamic banking and finance (IBF), bolstered by a small cadre of Shariah scholars, even though it continues to fail in its stated social justice imperatives. IBF evidently charges what is commensurate to interest while declaring it does not, promoting its products as ‘Shariah compliant’ – a term producing different meanings to different interpreters. This study adopts an Islamic maqasid methodology and analyzes discourses in reframing how such an industry emerged, how its practice departed from its claims, how it sustains itself, and asks why Muslims have not moved beyond it towards alternatives that procure greater possibilities for social and environmental justice. It reexamines discourses connected to the historical and contextual reframing of money, usury, interest and riba, and isolates the associated semantic obfuscations that power has influenced.