Islamic Banking Governance

Q1: Discuss Corporate Governance and explain the Major internal, external Institutional
players and the operational players?

Q2: Write a note on the functions of Shari’ah Board and the roles of the internal and external
Shari’ah Audit as components of the corporate governance of Islamic banking?
Q3: Explain the following terms?
a. Agency Theory
b. Islamic Financial Theory

Multiple Choice Questions
Instruction: Answer all questions, choosing the correct option to fill the gap. Each
question carries 1 mark
Multiple Choice Question:
1. The duty of the Board of Directors as a component of the internal corporate governance
is to…………………………?
a. Review compliance with the required Standards
b. Protect the interest and right of the shareholders and the investment depositors
c. Enforce and implement the policies
d. Adjudicate commercial disputes
2. ……………………….. is one of the major External Institutional Players in corporate
governance because it sets Principles for sound practices?
a. Banking Association
b. Bank Employees
c. Banks Depositors
d. Investment Account Holder
3. Corporate Governance provides a mechanism for resolving the problem of …………
among Management, Board of Directors, Shareholders and other stakeholders?
a. Conflicts Of Interest
b. Sharing of Profits
c. Determination of Incentives
d. Strict Government regulation
4. The corporate governance in the Islamic banks is unique because of the presence of the
……………….. as its component?
a. Independent Muslim Directors
b. Shari’ah Board
c. Ombudsman
d. Muslims Auditors

5. The duty of the …………….. Is to evaluate and give reports on the compliance with
Shari’ah?
a. Management
b. Sari’ah Board
c. External Shar’ah Audit
d. Shari’ah Officer
6. All of the following are methods of protecting the stakeholders’ interest, except………..?
a. The application of best practice standards and effective systems of accountability,
b. Information disclosure and market discipline,
c. Mobilization of Foreign Aids,
d. Effective Regulation and supervision,
7. It is the duty of the…………. to provide for the ‘laws and governance structures’ to cater
for the needs of Islamic Financial Institutions
a. Government
b. Shareholders
c. Top Managements
d. Depositors
8. The acceptable minimum numbers of the members of a Shari’ah Board
are……………………………………….?
a. 10 Qualified Shariah Experts/Scholars
b. 3 Qualified Shariah Experts/Scholars
c. 7 Qualified Shariah Experts/Scholars
4. 5 Qualified Shariah Experts/Scholars
9. The main object of Islamic corporate governance is………………………….
a. Accountability to shareholders
b. Accountability to God as well as to other fellow human beings,
c. Corporate governance responsibility
d. Social-Justic

10. IAHs refers to………………………………..?
a. Istisna’ Account Holders
b. Investment Account Holders
c. International Account Holders
d. Individual Account Holders