Corporate Governance of Islamic Financial Institutions -in Malaysia

Given the phenomenal increase in Islamic banking activities globally, it is important that there exists good governance practices of Islamic financial institutions (IFIs). This is primarily to ensure its sustainability in the long run. More importantly, in order for Islamic banks to play an optimum role in the development of Islamic countries, it is pertinent to develop regulatory structures to control fraud, exploitation, and un-Islamic behaviour. Additionally, the development of strong governance practices will win public confidence and thereby promote trust amongst equity holders, investors and other parties dealing with these IFIs. However, promulgating and developing standards and guidelines on corporate governance (CG) may not be adequate. What is needed is to examine the extent IFIs are actually following such guidelines. This is precisely what we have attempted to do.