Standardisation of Islamic banking practices: a regulatory perspective

The paper compares regulation and standard-setting process of Shari'ah-compliance for Islamic banking institutions in 13 Muslim and non-Muslim countries. The findings suggest that the regulation for Islamic banking institutions in most countries is formulated in the image of conventional banking. Some countries lack a proper legal framework with some notable issues including the lack of a dedicated Islamic banking law with few laws relating to corporate governance. However, most countries follow accounting standards of their domicile, International Accounting Standards (IAS) and Islamic accounting standards. The paper also suggests that due to various constraints facing Islamic banking practices, facilitating cluster or regional rules and practices may be the first step towards greater harmonisation.