Effective implementation of Shariah compliance culture in Islamic banks

Shariah governance and Shariah compliance culture are fundamental to the operational integrity and ethical conduct of Islamic banks. While Shariah governance provides oversight mechanisms, Shariah compliance culture integrates Shariah principles and values into the organization’s ethos. This study examines past researches on Shariah governance and its effectiveness in fostering the Shariah compliance culture within Islamic banks. The qualitative methodology employed in this paper utilizes content analysis, with data being analysed descriptively. The literature review underscores the importance of Shariah governance, the significance of Shariah compliance culture and the factors influencing it. The findings suggest that Shariah governance has a major influence in nurturing the Shariah compliance culture in Islamic banks, with its effectiveness measurable through six (6) key aspects namely leadership practices, main Shariah organs, policies implementation, regular communication, proper reporting, and education and training program. Further research is needed to assess whether the current Shariah governance structure is adequate in promoting Shariah compliance culture as well as to identify optimal Shariah governance setups that could further enhance Shariah compliance culture and practices.