Legal and Regulatory Framework in Islamic Banking System: Bangladesh Perspective
Islamic finance is one of the prominent phenomena over the last decade in the Middle-East and South-East Asia especially in banking industry. The role of Islamic banking in economy is still heavily debated.  The legal and regulatory framework in Islamic banking is more important rather than its function. But there is no independent body for regulating Islamic banking sector in Bangladesh. This paper argues that an independent body should be established for the regulation of Islamic banking in Bangladesh. Keywords: Regulation, Law, Islamic Banking, Bangladesh
Perception of Bankers and Customers towards Deposit and Investment Mechanisms of Islāmic and Conventional Banking : Empirical Evidence from Bangladesh
Islāmic banking is growing at double digit rate annually. Bangladesh is the third largest Islāmic country in the world in terms of Muslim population. The Islāmic finance industry is growing in Bangladesh as well as its challenges and critiques. It is interesting research question to explore the demand for Islāmic banking in the presence of a strong conventional banking culture in a developing country like Bangladesh. This study is primarily concerned with the theory of Islāmic banking and its practice in Bangladesh. It examines: (a) the Sharī‘ah principles for operation of Islāmic banking in Bangladesh, (b) the genesis of Islāmic banking in Bangladesh, (c) the factors which have led to the emergence of Islāmic banking as well as the growth, development and future of Islāmic banking in Bangladesh, and (d) the deposit and investment mechanisms of Islāmic and conventional banking in Bangladesh. The results show that both the bankers and bank customers have confusing notions about Islāmic banking practices, partly due to lack of proper knowledge about the fundamentals of Islāmic finance and also due to Islāmic banks’ over-reliance on short-term trade financing. The findings also indicate that although Islāmic banks in Bangladesh are competing successfully with their conventional counterparts in an environment where no independent guidelines or Act exist for them, the products and services they provide often seem to resemble with those provided by conventional banking. We suggest that regulatory authorities of Bangladesh should provide a well-defined and explicit legal and regulatory framework that, being consistent with Islāmic Sharī‘ah, should be realistic and flexible enough to meet internationally recognized prudential and supervisory requirements.
Asymmetric adjustment of commercial bank interest rates: evidence from Malaysia and Singapore
Abstract This paper examines the rigidity of commercial bank interest rates, using evidence from Singapore and Malaysia. An asymmetric error correction technique is used to test whether mean adjustment lags are different when retail rates are above or below their equilibrium levels. It is concluded, in both countries, that the mean adjustment lag is shorter when the deposit rate is above its equilibrium than when it is below its equilibrium. Using the framework of Hannan and Berger (1991), this finding implies that the hypothesis of collusion cannot be rejected.