Impact Of Shariah Audits On Financial Stability And Risk Management

This paper explores the role of Shariah audits in enhancing financial stability and mitigating risks within Islamic financial institutions. Shariah audits are essential in ensuring compliance with Islamic financial principles which prohibit activities such as interest, speculation, and investment in unethical sectors. This study analyzes the impact of Shariah audits on the operational and financial health of Islamic banks by examining audit processes, compliance levels and their correlation with financial stability and risk management outcomes. the research uses a mixed-methods approach to draw on existing literatures, financial data and expert interviews to provide a comprehensive understanding of how Shariah audits contribute to a more stable and resilient financial system. The findings highlight the importance of robust Shariah governance in ensuring trust and sustainability in Islamic finance.