A series of planetary fiscal crisis and economic recession for the past three decennaries have encouraged bankers, economic experts and research workers world-wide to see for an alternate fiscal solution. “ Amidst the planetary somberness, developing Muslim states continue to bear a heavy load. Many are at the having terminal of policy determinations, with small or no power to act upon the planetary economic docket ” Najib Tun Razak made this declaration during the World Islamic Economic Forum ( WIFE ) December 2012. The conventional banking is accommodating from the western secular no longer secure after the recent 2008 US subprime crisis and globally this has attracted attending to concentrate in this new banking theoretical account as an alternate banking theoretical account. El- Qorhi ( 2005 ) believes that constructing assurance in this new industry will promote the development of Islamic Finance. In relation to this, Chapra and Ahmed ( 2002 ) position that the primary of the new architecture that has received maximal accent so far at international forums is to better the corporate administration reinforced by prudential ordinance and supervising. The betterment in the corporate administration ( CG ) for Islamic banking will besides surely aid to heighten the soundness and stableness of the several states Islamic fiscal systems. With the addition globalisation of fiscal and Muslim merchandises markets has raised the involvement of both market participants and regulators in footings of the revelation quality in the fiscal coverage worldwide. As a consequence, Islamic Financial Institutions ( IFIs ) are required to increase the corporate administration and revelation quality in several one-year studies because this may cut down the information abnormalities between the direction of the Islamic Bankss and the stockholders. Harmonizing to Kothari ( 2000 ) , reduced information dissymmetry has desirable effects on the cost of capital and the volatility of security monetary values. Muslim Bankss should interpret their best patterns in their operations and good purpose enterprises for their stockholders and stakeholders in order to increase the trust in the signifier of capital which will able to spread out fiscal industry farther. As a consequence, higher net income return will be given to depositors and as an consequence of clients increase their degree of salvaging. From the net income gained, now these clients will be able to pass their money for goods and services as end consequence this procedure will excite the economic growing of a state.
The difference between conventional banking and the Islamic banking in mainstream of the corporate administration is the Shariah Board Committee. Ong ( 2010 ) noted that the Shariah Board maps as portion of the Islamic Banks corporate administration is substantively changed harmonizing to the rules of Islam. The struggles between the principal and agent ( bureau theory ) as a specific corporate administration issue are still non solved wholly. Harmonizing to Jensen and Murphy ( 2004 ) , there is no complete solution to decide to bureau jobs. However, the proposed solutions may be able to extenuate the present bureau jobs. This job has built-in failing in most conventional and Muslim Bankss since the coming of the fiscal system in Malaysia. Therefore, this had eroded the credibleness of the Malayan Financial Institutions during the past fiscal crisis. For illustration, Bank Islam Malaysia Berhad had made losingss in the twelvemonth of 2005/6 and had so attracted many unfavorable judgments so.
Bettering the transparence in the revelation of minutess and operation activities of several Islamic Bankss reflected in the fiscal studies may able to advance the high quality of conformity in the present CG. These benefits motivate regulators around the universe to endeavor for higher quality of revelations. The demand for corporate information by capital suppliers and other stakeholders have extremely influenced the Central Bank of Malaysia – Bank Negara Malaysia ( BNM ) to present guidelines on Financial Reporting for Accredited Islamic Banks ( GP8-i ) . The map of GP8-i is to put the minimal revelation demand that should be implemented by the Islamic Bankss licensed under the Islamic banking Act 1983. Harmonizing to BNM Guidelines on Financial Reporting for Accredited Islamic Banks ( 2005 ) the aim of the GP8-i is to supply the footing for IFIs to show and revelation of the studies including fiscal statement based on the banking and funding activities. In add-on, in twelvemonth 2011 BNM has established a Shariah Governance Framework ( SGF ) for IFIs. This comprehensive model may increase the public assurance and investors towards the Malaysia Islamic Banking. McLennan ( 2007 ) argues that the good administration enables efficient and effectual service bringing, and it besides ensures high degrees of answerability and transparence. The chief purpose of this survey is to analyze the Shariah Board Committee Report disclosures activities reported in the fiscal studies for Malaysia Islamic Bankss. In add-on, this survey besides aimed to understand the current Shariah Board Committee patterns harmonizing to the BNM Shariah Governance Framework in footings of function, map, independency, competency, revelation and transparence. Adopting from Sulaiman, Majid and Ariffin ( 2010 ) , this procedure will be divided into two chief platforms. First platform is to develop a comprehensive Shariah Board Committee index based on the BNM GP8-i and the BNM SGF. As for the 2nd platform, we need to entree the index revelation quality of Islamic Bankss in Malaysia based first procedure outlined. Qattan ( 2006 ) points out that IFIs failure to follow with the Shariah will take to a really serious repute hazard impact and will able to do speedy corporate failure. As a consequence, the survey may make consciousness to some critical issues refering to Shariah Board Committee features and power in order to advance better apprehension of revelations quality prepared by the Shariah Board Committee enabling IFIs to protect the involvement of stockholders and stakeholders. This survey will besides show the several IFIs perceptual experience of functions played by the Shariah Board Committee and its influenced on them. The undermentioned subdivision will discourse the literature reappraisal and subdivision 3 will discourse on the theoretical model of this research. Section 4 describes the information aggregation and the concluding subdivision five concludes the research.