Corporate Governance in Islamic Finance: Strengthening Accountability and Transparency for Sustainable Growth
DOI:
https://doi.org/10.59413/ajocs/v7.i1.14Keywords:
Corporate Governance, Islamic Finance, Accountability, Transparency, Ethical Practices, Amanah (Trust), Sustainable Growth, Regulatory ReformsAbstract
This paper examines the role of corporate governance in Islamic finance, emphasizing its importance in enhancing accountability, transparency, and ethical compliance. Islamic financial institutions operate under Shariah principles, which require adherence to ethical norms, risk-sharing, and social justice. Effective corporate governance mechanisms, including Shariah supervisory boards, board structures, and internal controls, are critical to ensuring that financial practices remain compliant while fostering investor confidence. The study adopts a qualitative research approach, analyzing existing literature, regulatory frameworks, and case studies of leading Islamic banks. Key findings indicate that robust governance strengthens financial integrity, mitigates operational and reputational risks, and promotes transparency in reporting. However, challenges persist, including inconsistent Shariah interpretations, lack of standardized governance frameworks, and limited accountability mechanisms in certain jurisdictions. The paper concludes that enhancing corporate governance in Islamic finance requires harmonization of standards, clear regulatory oversight, and integration of Shariah compliance with conventional best practices. These measures are essential for sustainable growth, investor trust, and the long-term credibility of Islamic financial institutions.
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