Corporate social responsibility of Islamic banks in Malaysia: a synthesis of Islamic and stakeholders' perspectives

The doctrine of Corporate Social Responsibility (CSR) has emerged and developed rapidly as a field of study. It is a framework for the role of business in society, setting standards of behaviour to which a company must subscribe to impact society in a positive and a productive manner at the same time as abiding by values which exclude profit seeking at any cost. The emergence of ethical investment, social enterprise, business ethics, environmental practices, a human rights approach to recruitment and employment conditions, and investment in the community are examples of such impacts. This research examines the Islamic perspectives of CSR, and argues that, CSR is not a subject alien to Islam, as it is deeply inscribed in Shari'ah. In particular, the thesis has showed the relevance of CSR as a globally accepted practice to Islamic banks. The Islamic banking system has an in-built dimension that promotes social responsibility, as it resides within a financial trajectory underpinned by the forces of Shari'ah injunctions. These Shari'ah injunctions interweave Islamic financial transactions with genuine concern for ethically and socially responsible activities at the same time as prohibiting involvement in illegal activities or those which are detrimental to social and environmental well-being. To further investigate whether the stakeholders of Islamic banks truly subscribe to the idea of CSR, this study provides empirical evidence based on a survey which was conducted on seven stakeholder groups (customers, depositors, local communities, managers, employees, regulators and Shari'ah advisors) of Islamic banks in Malaysia. The findings of this study reveal that stakeholders of Islamic banks in Malaysia have generally positive views of CSR. One of the most important reflections of their positive attitude is that CSR factors are evidenced as one of the important criteria in their banking selection decisions. Overall the study provides a clear justification and indication from a theoretical point of view and empirical evidence from stakeholder perspectives about the relevance and significance of CSR to Islamic banks in Malaysia.