NDLI: Is profit sharing investment account a deposit? The case of Institutions offering Islamic Finance

Content Provider	IEEE Xplore Digital Library
Author	Sharifah Khadijah Binti Syed Agil Alhabshi, Syed Musa Rahaman, Effendy
Copyright Year	2011
Description	Author affiliation: International Institute of Islamic Finance (IIIF) Kuala Lumpur, Malaysia (Rahaman, Effendy) \|\| Accounting Research Institute, Faculty of Accountancy, UiTM, Shah Alam, Selangor, Malaysia (Sharifah Khadijah Binti Syed Agil) \|\| Graduate School of Business, Universiti Tun Abdul Razak, Kuala Lumpur, Malaysia (Alhabshi, Syed Musa)
Abstract	This paper provides a conceptual discussion on the impact of regulatory requirements on deposit behaviors as exemplified by prescribed guidelines and regulations. It is postulated that given the distinguishing nature of profit sharing investment account (PSIA), the reporting requirements for existing deposits may not ensure information content of PSIA are effectively communicated to Investment Account Holders (IAH). Key distinguishing financial intermediation feature between IIFS and conventional banks is compared to describe and discuss the nature and classification of deposit and PSIA. The term “deposit” extends to a broad class of deposits including PSIA, suggests the need to examine the regulatory reporting requirements affecting information disclosure. Distinctions in the treatments on PSIA by Institutions offering Islamic Finance (IIFS) and that of deposit in the conventional counterpart, found in the literature are explored. Regulation and policy issues in the mobilization of PSIA and on the need for transparency in the PSIA related disclosures with supervisory and governance mechanisms are analysed. The issue is to what extent present practice in the treatment of PSIA ensures appropriate information content of PSIA to assist informed decision by IAH. The paper concludes with the need to examine the contents of regulatory guidelines to ascertain whether based on the effect of the interpretation of regulatory guidelines by the IIFS, PSIA is a deposit. This has consequential effect on behavior of the deposit and that of equity type deposits (PSIA). Existence of any regulatory disclosure gap in the prescribed guidelines; and likelihood of ‘skewed interpretations’ on the part of (IIFs), would stifle the potential growth of PSIA. Similarly, the existence of any ‘skewed interpretations’ on the part of IIFS would provide opportunity for manipulative behavior in the management of PSIA
Starting Page	465
Ending Page	470
File Size	197290
Page Count	6
File Format	PDF
ISBN	9781467300216
e-ISBN	9781467300209
DOI	10.1109/CHUSER.2011.6163774
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2011-12-05
Publisher Place	Malaysia
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Deposit Regulatory disclosure gap Regulators Profit sharing investment account Economic indicators Investments Banking Mathematical model Deposit behaviors Contracts Institutions offering Islamic Financial Services Introduction Guidelines
Content Type	Text
Resource Type	Article

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