The relationship between shareholders and shubuhat: A study on the Islamic banks in Malaysia

Abstract

One of the most important factors that affect the policies of banks is controlled by an investor or a group of investors, and a large proportion of the shares of the banks; this is so-called concentration of property Shleifer and Vishny (1986b; 1997). If the bank‟s shareholders majority is Muslims, they may influence the bank to comply with Shariah rules. In return, their customers will enjoy higher satisfaction, (Aziz, 2009). Therefore, the objectives of this paper are: first to find out if there are such things as shubuhat in Islamic banks. If there are, second to determine the relationship between shubuhat and the percentage of Muslim shareholders in the Islamic banks. A total of 21 Islamic banks in Malaysia representing the whole population were selected. Secondary data was used and sourced from the Banks‟ 2010 annual report. Using descriptive statistics, the existence and the extent of existence of shubuhat in Islamic Banks operating in Malaysia were ascertained. It was found that shubuhat do exist in a number of Islamic Banks, and the higher the percentage of Muslim Shareholders is, the lesser shubuhat exists.