Evaluating the Factors Facilitating or Hindering the Involvement of Shariah Committees in Risk Management Practices in Islamic Banks in Kingdom of Saudi Arabia (KSA).

Abstract

Abstract

Purpose: This study aims to add to the existing literature on Islamic finance by explaining the ways in which Shariah committees can improve and strengthen their influence over Islamic banks' risk management practises. This research attempts to break down the complexities of Saudi Arabia's risk management and identify the crucial role that Shari'ah committees play in ensuring compliance with Shariah law.

Design of study: A qualitative research method was adopted conducting semi-structured interviews. Purposive sampling was used to choose 34 individuals. The data was analyzed using thematic analysis, with the use of NVivo software, which made it easier to identify patterns in the Arabic answers. Following the ethical norms established by RMIT University, obtaining participants' explicit consent, and guaranteeing anonymity are all of the top priority.

Findings: Several factors determine Saudi Islamic Bank Shariah Committee risk management. An effective regulatory framework, Shariah committee-bank leadership communication, and learning of Islamic financial ideas can aid in Shariah compliance. However, interpreting complex financial services within Shariah, inconsistencies between Islamic principles and standard risk management methodologies, and a shortage of competent Shariah scholars with banking and risk management knowledge may slow development. Research is needed to understand Saudi procedures.

Oraginility: The current research comprehensivly documented potential factors that facilitate or resist the involvement of Shariah Committees in practices of risk management in Saudi Arabia's Islamic banks.