Success Factors of Islamic Banks: An Empirical Studyof Egyptian Faisal Islamic Bank when international Islamic banking suffered
some extraordinary conditions. Additionally, studies based on accurate data
confirms this intuitive conclusion whereby stock prices of all similar banks
fall when one of them suffers a drop in its price and most of them suffer
depositors’ pressure if one them suffers such a run.^14
In Sections 2 and 3, I mentioned the most important aspects that require
improvement and change – reduction of expenses, increasing earnings,
increasing the turnover rate of invested assets, improving quality of
investments and reducing the amount and ratio of idle funds. Each of these
aspects has details some of which will be discussed in the coming sub-
sections.
4.2 High Level of Trust
The reputation of management and founders is an issue that does not
need re-emphasis. It is evident that trust is the first foundation for the success
of any bank. In addition, the reputation of its Shari[ah board also matters. A
tremendous progress has been recorded in the area of financial fiqh over the
past four decades where numerous studies, symposia and conferences were
conducted with the help and support from Islamic banks. Adherence to the
Shari[ah in the banking and finance has become a familiar issue that does not
require new juristic reasoning, especially after new standards issued by
Accounting and Auditing Organization for Islamic Financial Institutions.
What every Islamic bank requires today is effective supervision on the
implementation of standards and collective religious rulings in their actual
deals and transactions with customers, depositors and shareholders, as well as
effective Shari[ah supervision on innovations by their financial engineering
department. This type of supervision cannot be exercised by bringing
together senior scholars “who are pre-occupied with a thousand other things”
in the Shari[ah board that presents traditional annual reports at the end of the
year. Thus, we consider it very important for every Islamic bank to devise an
effective institutional framework of Shari[ah supervision which enables the
bank to combine effectiveness with reputation, such that it would be able to
get real trust that it can deploy in marketing its services and new innovative
financial products. Part of such measures include the appointment of a
Shari[ah experts whose main duty would be the supervision of banking
operations and deals and assisting the financial engineering and investment
departments. He/she would also serve as a link between the bank and other
members of the Shari[ah board. Only a few Islamic financial institutions in
Sudan, United Arab Emirates, Kuwait, etc. have recently implemented this
concept.