Semarak International Journal in Modern Accounting and Finance

Zurri Waqf: Implementation and Accounting Procedures in Malaysia

2024-04-16T04:37:22+00:00

The challenge of managing dormant wealth in Malaysia traces back to the era of Prophet Muhammad SAW, where zurri waqf emerged as a mechanism to allocate assets to heirs excluded from inheritance laws. This study endeavours to evaluate the implementation of zurri waqf in Malaysia, scrutinize its accounting protocols, and advocate for accounting standards harmonized with zurri waqf principles. Conducted through qualitative means, this research involved interviews and content analysis with 18 participants representing waqf management units, Shariah scholars, and academic experts. It revealed that zurri waqf management in Malaysia is consolidated within four State Islamic Religious Councils (SIRC) exclusively, encompassing Kelantan, Terengganu, Penang, and Kedah. While these entities adhere to prevailing accounting standards, comprehensive disclosure of zurri waqf data in financial statements remains inadequate due to the absence of standardized accounting methodologies. The proposed accounting standards encompass recognition, measurement, and disclosure tailored to the unique characteristics of zurri waqf. Furthermore, the study identifies a correlation between zurri waqf implementation and social exchange theory, positing mutual benefits for trustees. Theoretical frameworks such as positive accounting theory and decision usefulness theory serve to rationalize the disclosure of pertinent information in zurri waqf reporting. The implications underscore the necessity for enhanced management practices and asset stewardship to optimize zurri waqf's efficacy as a wealth management instrument while upholding equity. Moreover, the advocated accounting standards aspire to augment financial reporting practices, thereby fortifying the accountability of Islamic institutions within the broader third-sector landscape.

Measuring Shari’ah Governance Practices: The Development of Shari’ah Governance Practices Index (SGPi) for Islamic Financial Institutions in Malaysia

2024-04-04T06:47:03+00:00

This paper focuses on developing an index as a quantitative approach to assess Shari’ah governance in Islamic financial institutions (IFIs) in Malaysia. The objective is to construct and implement the Shari’ah Governance Practices Index (SGPi) to evaluate the extent of Shari’ah governance practices within the IFIs in Malaysia. The SGPi, formulated based on five principal dimensions – Board of Directors, Shari’ah Committee, Management, Shari’ah Compliant Functions, and Institution – is rooted in established standards pertinent to the period analysed. The methodological framework of the SGPi was employed on a dataset consisting of 31 Islamic financial institutions in Malaysia, encompassing Islamic banks, takaful operators, retakaful operators, and development financial institutions. This comprehensive approach facilitated a detailed evaluation of adherence to Shari’ah governance across various types of IFIs. The results indicate that, overall, Islamic financial institutions in Malaysia exhibit strong Shari’ah governance practices. However, a comparative analysis among different types of institutions revealed that Islamic banks tend to display slightly superior governance practices compared to takaful and retakaful operators, as well as development financial institutions. This study not only introduces a novel tool for measuring Shari’ah governance but also provides insights into the differing levels of compliance across various types of Malaysian IFIs, highlighting the significance of continuous improvement in governance practices to uphold the integrity and sustainability of the Islamic financial system.

Financial Development Impact Towards Economic Growth and Income Inequality in 5-Asean Countries

2024-04-16T04:30:55+00:00

Financial development is essential in influencing a country's economic environment. ASEAN countries exhibit varying degrees of financial sector maturity, ranging from highly developed to less develop. Nevertheless, its banking sectors are relatively well-developed. The article aims to examine the impact of financial development on economic growth and income inequality in five ASEAN countries. The study examines a bank-based financial system using the ratio of domestic credit to the private sector to GDP as a measure of financial development. The study utilises panel data regression analysis spanning from 1990 to 2020. Other economic drivers included in the models as control variables are human capital, labour force growth rate, government expenditure, physical capital, inflation, and trade openness. The findings of this study suggest that financial development in five ASEAN countries has a significant negative relationship with economic growth while positively related to income disparity This study uncovers adverse outcomes on the impact of financial development, highlighting the need for legislative reform to improve the efficiency of the banking sector in delivering financial services to all societal groups.