Handbook of Empirical Research on Islam and Economic Life
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Handbook of Empirical Research on Islam and Economic Life

Edited by M. Kabir Hassan

In Islamic jurisprudence, a comprehensive ethic has been formulated governing how business and commerce should be run, how accountability to God and the community is to be achieved, and how banking and finance is to be arranged. This Handbook examines how well these values are translated into actual performance. It explores whether those holding true to the system are hindered and put at a disadvantage or whether the Islamic institutions have been able to demonstrate that faith-based activities can be rewarding, both economically and spiritually.
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Chapter 7: Reporting of zakat and charitable activities in Islamic banks: theory and practice in a multi- cultural setting

Mamunur Rashid, M. Kabir Hassan, How Shi Min and G.M. Wali Ullah

Abstract

This study aims at understanding the theory and practice of the reporting of zakat and charitable activities in Islamic banks in selected countries, an average size of the zakat amount, and how the reporting of zakat and charitable activities stands against other ethical identity indicators. Existing theories of corporate social responsibility (CSR) reporting and International Financial Reporting Standards (IFRS) in the selected countries are discussed. The selected banks are a mixture of purely Islamic banks and banks offering dual banking services. The countries are Bangladesh and Malaysia. To understand the practices of zakat and charitable reporting, the study employs Weber’s appearance-based content analysis where a score of ‘1’ was assigned for the presence and ‘0’ for the absence of any zakat and charity activity. An average was calculated for each activity, year and country. zakat reporting is further divided into pre- and post-crisis periods where the year 2008 was considered as the cut-off year (2009 onward was the post-crisis period). The zakat and charitable activity reporting indices were analysed against other ethical identity indicators for the same pre- and post-crisis periods. The amount of zakat as a percentage of total asset and as a percentage of net profit after tax for the post-crisis period was determined in order to gain an understanding of the charitable contribution by Islamic banks.

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