An investigation of the disclosure of corporate social responsibility in UK Islamic banks

Nov 01, 2017


Published in: Academy of Accounting and Financial Studies Journal

Publisher: Allied Business Academies, London

/ Adel Ahmed

The adverse consequence of the on-going financial crisis has ignited interest into the relationship and lack of communication between ethics and banking. However, already on the ethical banking horizon, the Islamic banking model (in theory) is in itself built upon the objective of pursing the benefit of society; rather than to solely profit maximise. However, Islamic banking is not free of its own critics. There are claims that the industry has ‘mimicked’ the conventional model; while marginalising their societal role. In addition, a few studies focused on Corporate Social Responsibility (CSR) disclosure practice of Islamic banks. The consensus has been that Islamic banks make minimal disclosure of CSR issues. Nevertheless, this is puzzling as Islamic banks are expected to fulfil their Social accountability and full disclosure expectations; as per the Sharia Law (Islamic law). Furthermore, rather than solely pursue profit maximisation, Islamic banks are expected to apply a moral filter when financing and investing, as well as fulfilling their role of distributing and allocating investments. This helps Islamic banks achieve their objectives; social betterment and justice. These objectives are derived from the Islamic economic paradigm, which interlinks vital Islamic concepts of unity, justice, equity, trusteeship, accountability and benevolence. This Study used content analysis methodology to achieve the objective of the study to compare the communicated versus the expected CSR disclosure made by four UK Islamic banks. The study used the disclosure index developed by Haniffa and Hudaib (2007) for Islamic banks, as the expected disclosure benchmark. The results found that communicated disclosure made by the Islamic banks fell short of the expected or ideal disclosure set out by the benchmark. The overall the result shows the trend of poor disclosure among Islamic banks in Muslim countries (where most studies were focused) is supported by UK Islamic banks, leaving the status quo of poor disclosure unchallenged. The result is surprising since the Islamic banks are expected to be socially accountable. Therefore, make full disclosures in order to fulfil the accountability placed onto them by God (primarily) and thus also mankind (stakeholders). Keywords: Islamic Banking, Islamic Corporate Social Responsibility Disclosure (Icsrd), Uk Islamic Banks, Content Analysis

Other Researches

Integrating Global Sustainability Elements Into Accounting Programs: UAE University Business Education Case Study

Sustainability nowadays is on many organizations and governments’ agendas. Addressing sustainability challenges and transforming them into opportunities for value creation is part of the DNA of tomorrow’s successful companies. As a result, more org...

Socially Responsible Investing Interconnect with the Supply Chain Management in Islamic Finance Model

The concept of Islamic finance is related to Socially Responsible Investment (SRI) by many researchers in different time frames based on the similarities between Islamic finance and the concept of SRI and Supply Chain Management (SCM). SRI has been ...

The impact of e-commerce in supply chain management on permanent establishment concept

Information and communications technology (ICT) in supply chain management has enabled corporations to use offshore facilities for outsourcing commercial activities. This has expanded service trade significantly but poses challenges for tax authori...

An Investigation and Evaluation of Information Systems Combined/Joint Honours Degree into Accounting Programmes

The Information Systems combined and joint honours degree programmes become more popular in accounting at institutions of higher education in the UK leading to the award of an honours degree which focus on the use of computers rather than on their t...

Information Systems Competencies in Accounting Education

Rapid developments in information technology (IT) and Information systems (IS) have posed many challenges and changes to the accounting profession. This has resulted in a need for quicker and more decisive action by accounting education to integrat...

Integrating Employability Competencies: A Framework for Accounting Education

The world of work has changed significantly over the last few years and a degree is no longer enough to secure graduate employment. The accounting profession world wide has come under close scrutiny in the last decade as a result of a series of high...