Apartment purchase under Shirkah-ul Milk and shariah compliance in Islamic banks: the perception of bankers and clients in Bangladesh
Journal of Islamic Accounting and Business Research
ISSN: 1759-0817
Article publication date: 18 October 2021
Issue publication date: 1 February 2022
Abstract
Purpose
Apartment purchase is an increasing investment trend in Islamic banks as clients trusted to eradicate the interest from financial dealings to capture the Islamic Principles. The paper aims to investigate the Shariah compliance in the investment of apartment purchases under Shirkah-ul milk in Bangladesh Islamic banks.
Design/Methodology/Approach
This study examined the perception of 125 clients and 25 managers from five key Islamic banks on the investment practices of apartment purchases. This study applied two data analysis methods: reflective measurement model was operated for examining the consistency, reliability, multicollinearity problems and validity; and Smart PLS-SEM (structural equation model) was used to investigate the direct impact of each explanatory variable on Shari’ah compliance in Islamic banks.
Findings
The results indicated that Islamic banks could not strictly maintain the Shariah compliance in apartment purchase. Such Shari’ah non-compliance is due to lack of knowledge and understanding with regard to bank’s objectives and philosophy, weak Shariah board, audit, weak regulatory body and supervision problem. These findings also firmly match clients’ and managers’ perceptions.
Research Limitations/Implications
A limited size of clients and bankers were involved in this study. The study focuses only on perceptions of Islamic banks’ clients and managers and avoids Muslim clients who involved conventional banks.
Originality/Value
This study provides Shariah-compliant alternatives in investment avenue for apartment purchases. These Shariah modes include Apartment Purchase Musharakah Mutanaqasa; Bai-Muajjal; and Apartment Purchases under Shirkah-ul Milk, which captures various limitations against current apartment purchase practices as well as to develop clients’ trust in Islamic banks.
Keywords
Acknowledgements
The author appreciates the reviewers and editor-in chief for their constructive comments and precious suggestions, which have really improved the quality of the paper. The authors did not receive any research grant and funds for this research paper from any public, private or non-profit institution.
Citation
Uddin, M.N. (2022), "Apartment purchase under Shirkah-ul Milk and shariah compliance in Islamic banks: the perception of bankers and clients in Bangladesh", Journal of Islamic Accounting and Business Research, Vol. 13 No. 2, pp. 197-219. https://doi.org/10.1108/JIABR-09-2020-0300
Publisher
:Emerald Publishing Limited
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