NAVIGATING SHARIAH GOVERNANCE PRACTICES AND CHALLENGES IN GLOBAL ISLAMIC FINANCE: A NARRATIVE REVIEW
DOI:
https://doi.org/10.35631/IJLGC.1145042Keywords:
Shariah Audit, Shariah Committee, Shariah Governance Framework, Shariah ReviewAbstract
Shariah governance symbolises the essential institutional and legal foundation of the Islamic finance industry, differentiating it from the conventional financial systems through strict adherence of its products, transactions, and operations to Islamic commercial jurisprudence. The aim of this narrative review is to synthesise the global literature to examine the current state of Shariah governance frameworks across varying jurisdictions. The paper critically evaluates the contrasting centralised and decentralised regulatory models, and the pivotal role and persistent challenges faced by Shariah committees. This paper underscores the impact of regulatory evolution (such as the transition from Shariah Governance Framework 2010 to Shariah Governance Policy Document 2019 in Malaysia), by examining these frameworks through contemporary corporate governance theories including agency, stewardship, stakeholder, and institutional theory. This paper assesses the research trends over nearly four decades (from 1985 to 2026), maps scientific actors, and recommends a future research agenda comprising of 26 core research questions, highlighting the necessity for international standardisation and integration of Shariah governance with sustainable development goals (SDGs). This review recognises important challenges, including the freedom of Shariah committee members in making decision, conflict of duties resulting from several memberships in Shariah committees, the critical inadequacy of competent and dual-certified human capital, the need of the robust internal Shariah control mechanisms (audit, review, risk management, and research), and the state of corporate transparency.
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