Islamic accounting in UAE banks
Abstract
This study explored the main factors that contributed to the rapid expansion of Islamic Accounting. The research findings revealed that tremendous growth of Islamic banking in the last two decades was attributed to the increasing role of the Middle Eastern region in the global economy and an acute need in Shariah-compliant financial products.
Empirical evidence showed that certain Muslims perceive Islamic banks as an emulation of conventional financial institutions. However, the findings of this study revealed that ADIB adheres to the principles of Islamic accounting and managed to build trust in the eyes of customers most concerned with compliance of transactions with the Shariah. The research also found that recently the pace of growth and profitability of Islamic banks started to decline. In this regard, it is recommended to revisit the strategy and focus on the untapped market by offering Muslim-specific financial products aligned with the Sharia Law to ensure sustained competitive advantage. While this study hopefully contributed to the deeper understanding of the role of Islamic Accounting in the Muslim countries, more research on its applicability in western economies is needed.
Key words: Islamic Accounting, Islamic Accounting Standards, Islamic banking, Shariah-compliance, Muslim society.
TABLE OF CONTENT
CHAPTER 1: INTRODUCTION
1.1.Background
1.2.Problem Statement
1.3.Significance of the Study
CHAPTER 2: LITERATURE REVIEW
2.1. Conceptual Framework of Islamic Accounting
2.1. A History of the Development of Islamic Accounting Standards
2.2. The Reasons of Islamic Accounting Expansion
2.3. The Problems with Conventional Accounting in the Islamic Countries
2.4. Strategies for Islamic Financial Institutions
2.4.1. Exploiting the niche
2.4.2. Competing with conventional banks
CHAPTER 3: METHODOLOGY
3.1. Research Question
3.2. Research Design
3.3. Research Technique
3.4. Sampling Strategy
3.5. Data Collection Design
3.6. Design of Research Instrument
Chapter 4: FINDINGS AND DISCUSSION
4.1. Presentation of the Demographic Data
4.2. Key Factors of Islamic Accounting Expansion
4.3. Challenges of Islamic Accounting Implementation
4.4. Strategies for Addressing Challenges Faced by ADIB
Chapter 5: CONCLUSION
5.1. Summary of the Findings
5.2. Limitations of the Study
5.3. Suggestions for Further Research
References
Appendix A. Interview Questions
CHAPTER 1: INTRODUCTION
Background
Islamic Accounting is experiencing an unprecedented growth, with the combined profit of Islamic banks hitting the US$10 billion mark in 2013 (Ernst & Young, 2015). The main principle of Islamic accounting is to avoid dealing with interest transaction in all form of transactions (Sharairi et al., 2013). According to the bold Ernst & Young’s estimations (2015), this sky-rocketed expansion is likely to continue to reach US$ 37 billion by 2019. Middle East is a heart of Islamic banking, with 80% of contributions made by the UAE financial institutions, while the remained 20% generated by the rest of the world (Hanif, 2011).However, recently the growth rate and profitability of Islamic banks are declining (Kearney, 2011). This may be reasoned by intensifying competition in the UAE market for Islamic banking (Wilson, 2009). To sustain profitable growth, Islamic banks will have to revisit their strategies and adopt more sophisticated customer-oriented business models (Kearney, 2011). Abu Dhabi Islamic Bank was established on 20 May 1997 …
