Abstract
The main aim of this study is to undertake a critical examination of the ethical and developmental performance of an Islamic bank as communicated in its annual reports over a period of 28 years (1983–2010). Islami Bank Bangladesh Limited’s (IBBL hereafter) ethical performance and disclosures are further analyzed through interviews conducted with the bank’s senior management. The key findings include an overall increase in ethical disclosures during the study period. However, the focus on various stakeholders’ needs has varied over time reflecting the evolving nature of the Islamic finance industry over the last three decades. Based on a secular economy, IBBL focused in the first two decades on the “Particular” Shariah compliance disclosure as a way of establishing its reputation and differentiating itself from conventional banks in a dual banking system. Post 2005, the ethical performance and disclosure shifted to more “Universal” disclosures such as sustainability, charity, employees, and community related disclosures signaling responsible conduct and the bank’s adoption of a “wider stakeholder approach.” However the bank is still failing to provide full disclosure on certain significant categories such as sources and uses of disposable income, thereby contradicting the principles of full and comprehensive disclosure and accountability. In addition, the structure of IBBL’s investment portfolio reveals an overreliance on debt-based financial instruments and a shortcoming in fulfilling the developmental and social objectives of Islamic finance. This is evidenced by the “qualified” Shariah Supervisory Board reports that the bank consistently received. This research provides further evidence that Islamic banking and Finance in its current practices reflect the “global” and the “local” influences in an era dominated by global conventional finance.
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Notes
Due to their dual accountability in this world and the hereafter.
The foundation of IBF is its adherence to the norms and regulations prescribed in the Qur’an and the Sunnah, as expressed by the prophet Mohammed.
Historically, religion has played a great role in finance, and all of the Abrahamic religions of Christianity, Judaism and Islam have received comparable teachings regarding riba (usury). These religions as well as some secular viewpoints, like that of Aristotle, have regarded money as sterilized and producing money from money i.e. in the absence of enterprise and asset, as problematic (Warde 2013).
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Acknowledgments
Earlier versions of the paper had been presented at the British Accounting and Finance Association Conference organized by the University of Aston, 12-14 April, 2011, Birmingham, UK and Third World Business Ethics Forum, University of Macao, 27-28 October, 2010. We acknowledge the financial support provided to this project by the El Shaarani Centre for Islamic Business and Finance and the Aston Academy for Research into Management, Aston University. We would like to thank the participants of this project for their cooperation and time. We also acknowledge the research assistance provided by Longsheng Lin, Marwa Elnahass, Ola Mekki and Mufeedh Choudhury. Finally, we would like to thank the guest editors of this special issue and three reviewers whose comments have helped to improve the paper significantly. Usual disclaimer applies.
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Belal, A.R., Abdelsalam, O. & Nizamee, S.S. Ethical Reporting in Islami Bank Bangladesh Limited (1983–2010). J Bus Ethics 129, 769–784 (2015). https://doi.org/10.1007/s10551-014-2133-8
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DOI: https://doi.org/10.1007/s10551-014-2133-8