This master thesis examines key differences between Islamic and conventional banks. We use a data on 2374 banks from 47 countries for the 2010-2016 period. We apply comparative statistical analysis, Ordinary Least Squares regression and System Generalized Method of Moments to estimate the effects of both bank types on their profitability and stability. The contribution of the thesis is threefold. First, we find a significantly higher profitability of Islamic banks compared to conventional ones. Second, we did not find any evidence that Islamic banks are less stable. Finally, we conclude that the women participation in financial activities is correlated with the development of conventional, not Islamic, banks JEL Classification G21, C33, F33, F34, J11 Keywords Islamic banking, bank profitability, bank stability, gender participation Author's e-mail Sabina.mammadli@hotmail.com Supervisor's e-mail Petr.teply@fsv.cuni.cz Master's Thesis Proposal Institute of Economic Studies Faculty of Social Sciences Charles University in Prague Author: Bc. Sabina Mammadli Supervisor: Doc. PhDr. Petr Teplý, PhD. E-mail: Sabina.mammadli@hotmail.c om E-mail: Petr.teply@fsv.cuni.cz Phone: 608 550 236 Phone: 222 112 326 Specializatio n: CSF Defense Planned: June 2017 Proposed Topic: An Application of Islamic Banking Principles in...

The contrast between the theory and practice of Islamic banking is generally acknowledged by many scholars. After more than three decades in operation, the rapid growth of the Islamic banking industry is, in reality being driven by the application of the debt-like contracts (e.g. murÁbaÎah and ijÁrah) rather than the profit and loss sharing contracts (e.g. muÃÁrabah and mushÁrakah). As the adaptation of the former contracts creates "unauthentic" Islamic financial products, many have questioned their compliance with sharÐÝah principles. The present study analyses this issue by examining the application of muÃÁrabah rules in Malaysian Islamic banking practices. It evaluates the extent to which the current practices fulfil the principles and the ethical framework of the muÃÁrabah contract as propounded by the classical jurists. The study also analyses the justifications of Malaysian sharÐÝah scholars for modification of the doctrine, adapting it to the modern banking business. The study found that the local sharÐÝah scholars have adopted an incoherent legal methodology when making their ijtihÁd. They can be very rigid, concentrating solely on the legal technicality and at the same time be very flexible, adapting an unregulated doctrine of maÒlaÎah. Therefore, some of their resolutions could be seen as contradictory to the rulings found in classical fiqh.

The concept of a Sharia compliant financial system has been a frequently discussed topic among scholars, bankers and media since the 1960th. It origins from the prohibition of interest, riba, which is stated in the Quran. Islamic banking is spread across the Muslim world and also exists in some western countries. This paper will try to create an image of what Islamic banking is in theory and in practice. This will be done by looking into the different methods of interest free banking, the Quran and the annual reports of four Islamic banks in different countries. The examined banks are Islamic Bank of Britain, Al Salam Bank-Bahrain, Al Rajhi bank (Saudi-Arabia) and Bank Islam (Malaysia). The study shows that there are few, if any, religious symbols in the annual reports. Instead, focus lies on progress, science and modernity. All of the banks have Sharia councils that ensure that the products are Sharia compliant. The banks are no longer using the profit and loss sharing systems as their primary products, which is indicated by the theoretical framework. Instead, they have developed different ways to efficiently provide Sharia compliant financial services according to their own conditions. An important lesson to learn is to avoid seeing the Islamic banks as religious charity organizations and start looking at them as profit maximizing companies that specialize in a sharia compliant financial product.

Magister Commercii - MCom (Business and Finance) / This master's thesis report is a record of my action research study conducted at a traditional bank in South Africa. The report follows a narrative writing style. It contains my personal learnings and reflections. In it I record my practices aimed at promoting Islamic banking products of a traditional bank. In undertaking this action research, I employed interventions whereby I improved my own learning and behaviour through practice. This action research took place within the customer facing division of a national traditional bank in the Western Cape.

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This dissertation explores the drivers of why organizations, as members of its market category, choose to conform or deviate from the category’s codes. In essence, codes are the social rules category members are expected to abide by and that underpin the very existence of a category. Given the importance of producer conformity in upholding a category’s continued existence, code deviance then seems a counterintuitive strategy to pursue. Nonetheless, organizations are known to defy codes in certain instances, sometimes even pairing the violation simultaneously with conformity to other codes. On top of this, organizations also seem to be able to strategically decide which codes they will abide by to a certain extent. Each of the three papers in this dissertation investigates why organizations may choose to either conform or deviate by, respectively, examining (1) the identity difference between the code violator with the potential adopter of the code violation, (2) the taken-for-grantedness of the category the organization is a part of, and (3) the individual status and organizational identity (insider-outsider) of the producer. The main overarching finding of this dissertation is that organizations will take into account both its internal resources and external socio-environment to decide which strategy it will deploy and whether it can afford to do so. All in all, this dissertation specifies how the three factors mentioned may affect an organization’s propensity to conform or violate to category codes.

Notions of corporate social responsibility (CSR) have been suggested to be consistent with an Islamic view of society. Indeed, values and principles that have been central to Islam since the time of the holy Prophet Mohammed (Peace and Blessings be upon him) may serve as a foundation for notions of corporate social responsibility (CSR) similar to those in the West. Much contemporary discussion of CSR, however, has not recognized this. These discussions have largely been based on a Western orientation informed by Western religious values. Moreover, CSR has evolved literally in response to particular issues or problems that are specific to businesses in a Western context. This led to a lack of a comprehensive global context within which a wider perspective of CSR should be positioned. On the other hand, the notion of social responsibility and justice has been an integral part of Islamic society for nearly 14 centuries. However, the Islamic literature remains scattered, fragmented and lacks a coherent framework that would allow such a concept in Islam to be systematized. While Islamic philosophy is rich in precepts pertinent to CSR, these precepts have not yet been formally synthesized to present a systematic model with an explicit notion of CSR in Islam. Thus, there exists a gap in both the Western and Islamic literature. This was fruitfully exploited in this study to advance the understanding of the concept of CSR in a wider cultural and religious setting. This study explored this new territory and presented a conceptual framework of CSR in Islam based on Shariah (the Islamic legal and social system) derived from the holy Qur'an and Hadith. It provided both, a counterpart and a comparable base in the study of various issues relevant to CSR and international business from a much wider global perspective. It also provided significant insights into Islamic jurisprudence (Fiqh) regarding business practice. The consistency of the conceptual framework of CSR in Islam with contemporary business practices was explored using a survey of Islamic banks located in different parts of the world. The survey revealed that many current practices of Islamic banks mirror the expected behaviours or practices generated in the Islamic framework. In fact, it was possible to discern that the organizations surveyed implement the Islamic code of conduct rather extensively. Against this background, a consistency with the framework of CSR in Islam presented in this study was identified. Such consistency, however, was driven by legal requirements in adherence to Shariah rather than an explicit understanding or pursuit of CSR. The lack of a systematic framework with explicit notions of CSR from an Islamic perspective caused hindrance in implementing CSR practices in Islamic organizations. It follows that this study was a modest step towards filling this lacuna by presenting a systematic and coherent framework of CSR in Islam.

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This dissertation examines Islamic banking in Jordan. It is argued that institutions perceived as culturally authentic may play important political roles in a post-colonial society. Islamic banking in particular can both function in a modern, globalized economy and express cultural tradition. It may help to legitimate Jordan’s political structures and overcome social and economic bifurcations between traditional and modern sectors of society. Jordan is a part of a region of the world in which the colonial experience continues to have an enduring legacy. What had previously been a tribal Bedouin society was transformed almost overnight. Its modern banking system transgressed Islamic norms and laws and excluded huge portions of the population who continued to see meaning in the religious values and principles rooted in the social and cultural institutions that had just been trampled upon. This dissertation looks into how Islamic banks that interact in a global economy while remaining true to culturally authentic beliefs and practices can begin to close the gaps between state practice and popular beliefs. The strongest opposition to the monarchy in Jordan has come from political Islamists who feed upon popular discontent and alienation caused by the practices and actions of a ruling elite that does not share the same cultural values as the majority of the population. Much of what the Islamists espouse, while culturally authentic, is removed from the political, financial, and economic realities of the modern era. Islamic banking thus has the potential to play a mediating role between a modernizing elite and this Islamist backlash. This dissertation will test the extent to which cultural authenticity matters by observing how Islamic banks in Jordan have been able to tap into a latent demand for alternative financial practices and how the Islamic financial movement relates to Islamist political movements. Although Islamic banking has not achieved its full potential, the dissertation presents strong evidence of its capacity to bridge divisions between state and society. / text

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