Abstract
Islamic banking has established for the last 40 years, yet only recently researchers acknowledge social failures of Islamic banking and finance. This has led to a proposition of forming new forms of banking and non-banking institutions that include social banking. It is argued that in considering the developmentalist needs of the Muslim societies in Malaysia, there is a need to go back to fundamentals of Islamic finance in realising the aspirational Islamic moral economy that emphasises on the social good, capacity development at the individual and social levels. This paper aims to explore the concept of social banking and search for the possibilities for internalisation in Malaysian Islamic banking. To gain understanding on this pertinent issue, an empirical investigation was conducted at 17 Islamic banks in Malaysia. A mixed method was employed. For the primary data collection, 477 respondents of Islamic banks clients and employees participated in a self-administrated survey, and 11 respondents from the executive and managerial level of eight Islamic banks involved in a semi-structured interview survey. The integrated analysis implies that Islamic banking significantly contributes to socio-economic development. On the contrary, financial and economic practices in everyday life do not reflect the social economic justice. The result further illustrates that the Islamic banks lack social contributions as they prone to practice efficiency-oriented institutions. Hence, a social banking model is needed to solve the lack of socio-economic development issue in the current practice of Islamic bank.
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Notes
Zakat or alms is one of the five pillars of Islam. It is an obligation for Muslims to pay alms to the eight groups of asnafs (unique beneficiaries) upon the accumulated wealth one possesses which fulfils specific criteria. Its objectives are to alleviate poverty and achieve economic emancipation (Said et al. 2014; Ahmed 2004) while waqf is a voluntary act that does not only serve problem of poverty but extends also to social economic development. Waqf is an endowment fund that normally given in the form of property which is donated for the ummah or public to enjoy such as land, school, hospital, and so on (Haneef et al. 2014).
Tenth Malaysia Plan, known as Rancangan Malaysia Ke-10 (RMK10), is the national budget plan forecasted for all economic activities for the year 2011–2015. This plan is provided by the Economic Planning Unit (EPU). It paid special attention to empowering women in the economic sector. Among the issues raised are as follows: (1) increasing woman participation in the workforce, (2) increasing the number of women in key decision-making, (3) improving provision of support for women in challenging circumstances such as widows, single mother and lower incomes, and (4) eliminating all forms of discrimination against women (EPU 2010).
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Mohd Nor, S., Abdul Rahim, R. & Che Senik, Z. The potentials of internalising social banking among the Malaysian Islamic banks. Environ Dev Sustain 18, 347–372 (2016). https://doi.org/10.1007/s10668-015-9651-0
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DOI: https://doi.org/10.1007/s10668-015-9651-0