Comparative Analysis of Regulatory and Supervisory System of Islamic Banks: Evidence from Pakistan, Malaysia, Bahrain and United Kingdom

Abstract

This study has critically analysed the regulatory and supervisory framework of Islamic banks in dual banking system of Pakistan, Malaysia, Bahrain and United Kingdom. The core regulatory functions and issues are taken under discussion and results revealed that conflicting views of Islamic jurist and policy makers have further aggravated the Shariah problems. Over the years the regulatory framework in each country moulded in a peculiar way, where Malaysia and Bahrain have developed their indigenous governance systems while in United Kingdom Islamic banks are still under conventional setup. In Pakistan, Islamic banks are under the governance of orthodox regulatory framework, combined with developing Islamic banking regulatory systems. Further, the effectiveness of existing regulatory framework has never been fully challanged by extremely conservative and embryonic Islamic banking industry.

DOI: 10.5901/mjss.2015.v6n6s2p629