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A study on the corporate social responsibility of Islamic financial institutions: learning from the experience of socially responsible financial institutions in the UK
thesis
posted on 2011-01-27, 16:27 authored by Beebee S. SairallyIn order to fulfill the Shari'ah objective of promoting the welfare of society, Islamic financial institutions (IFIs) are expected to consciously align their decisions
and actions so that they are `socially responsible'. An integral policy approach
towards corporate social responsibility (CSR) would constitute assigning explicit
social objectives to IFIs over and above their economic, legal, Shari'ah, and ethical
responsibilities. Alternatively, the task of undertaking socially-oriented projects
could be argued to be a discretionary responsibility of IFIs, with the objective of
CSR being sought merely as a peripheral practice. Recent debates on the evolution of
the practice of Islamic finance highlighted the profit and economic efficiency
motives of IFIs rather than a concern for socio-economic equity and welfare. A
divergence between the economics literature on Islamic finance and the course taken
by the practical field of Islamic banking and finance has been argued to be arising
over the years. An assessment of this contention motivates this study.
The study seeks to assess the Corporate Social Performance (CSP) of a sample of
forty six financial institutions offering Islamic products (FIIPs), located worldwide,
which have responded to a questionnaire survey and whose CSR practices have been
further verified by content analysis. The findings revealed that the majority of the
Islamic financial practitioners believed in attributing an integrated social role to
FIIPs. However, the practices of the FIIPs reflected a more limited approach to CSR.
Most of the FIIPs were observed to be focused on meeting their legal, economic and
Shari'ah responsibilities, that is, were concerned with the goals of profit
maximisation and for their transactions to meet Shari 'ah compliance.
Concurrently, the study appreciates the lessons that can be learnt from the
socially responsible financial (SRF) movement that has evolved in the West to
promote ethical finance. The ethical worldview of these socially responsible financial
institutions (SRFIs) is guided by secular humanistic values which are largely socially
determined rather than being drawn from a religious philosophy. The CSR practices
of twelve British SRFIs - comprising mainly banks and asset management firms -
have therefore been critically analysed through content analysis of their published
and electronic materials. The analysis revealed that a sophisticated understanding of
CSR shaped the culture of SRFIs which have mostly embedded CSR within their
business transactions. CSR constituted an integral, explicit and strategic decision of
management, with appropriate management system in place and, in some cases, with
indicators developed to assess CSR performance against planned targets.
History
School
- Business and Economics
Department
- Economics
Publisher
© Beebee Salma SairallyPublication date
2006Notes
A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.EThOS Persistent ID
uk.bl.ethos.432802Language
- en