Creating Stakeholders’ Value through Islamic Ethical Dimension: A Study of Islamic Banking Vs Conventional Banking

Abstract

The purpose of this paper is to examine stakeholders’ values in Islamic banking by comparing Islamic and conventional banking’s ethical practices in the Middle East region. The study is targeted to different groups of stakeholders of Islamic and non-Islamic banks of the Middle East region through a survey questionnaire. The stakeholder group consists of the groups of customer, depositors, employees, branch managers, regulators, Sharia’h advisors who are directly or indirectly associated or can affect or affected with Islamic banking ethical principles and practices. The data analysis is based on content analysis from the past studies and statistical tools, mean, ranks, Kruskall-Wallis test of statistic, regression for testing of hypothesis and model building. The findings of the study reflect the efficiency of Islamic banking over conventional banking and future scope & importance of ethical practices of Islamic banking worldwide. Middle East is the center of Islamic banking with a contribution of 3/4 of the total volume with the rest of the world. The topic of research is pertaining to Islamic ethical banking and its relevance for those involved in Islamic banking and finance regarding Islamic ethics and values. As an Islamic banking principles are based on divine revelation following Sharia’h principles of the Qur’an and Sunnah tradition is more concerned with well-beings through creating non-economic (non-monetary) values, mutual trust, sharing of profit & risks, fairness and social justice, than economic (monetary) values in terms of interest. The paper is supposed to be a further extension of the past studies and to find out contemporary trends in Islamic banking in further development over conventional banking especially gulf region of the Middle East.

Keywords: Islamic banks, Conventional banks, Ethics, Stakeholders, Sharia’h, Qur’an, Sunnah, Fiqah.