A Compliance of Islamic Banks with the Principles of Islamic Finance (Shariah): An Empirical Survey of the Jordanian Business Firms

Abstract

This paper examines the degree of Jordanian Islamic banks' compliance with the principle of Islamic finance which is consistent with Sharia (Islamic Law), sourced from the Quran and the Sunnah. The study has been conducted by distributing questionnaires to corporate customer dealing with various Jordanian Islamic banks; the sample has been selected by simple random sampling approach with sample size of 30 firms. A total of 150 questionnaires were distributed and only 124 have been analyzed. The study used descriptive statistics, and one-sample t-Test to answer the questions of the study. The most important Findings in this study were: Jordanian Islamic banks compliance with the principle of Islamic finance which is consistent with Sharia (Islamic Law), funded businesses consistent with dealing with usury transactions that not dealing with Riba in the financing business. Compliance to avoidance of gambling and speculation (maysir) in any party, the highest arithmetic mean depending in the Likert scale was finance projects that deal with activities, goods and services and industries is not forbidden (haram). The lowest arithmetic mean that is significantly less than the test value in the Likert scale which is (3) related with risk-sharing, which means that Jordanian Islamic Bank has not been a sufficient part to share the risk and sought to transfer the most part of the risk to the financier party by obtaining adequate guarantees which ensure recover his capital. At the last point to be recommended to the Jordanian Islamic banks were emphasized their attentions towards determining the exact mechanism by which profit and loss should be determined. This is one area where more work needs to be done.