۱- Introduction

۲- Paradigms

۳- The radical structuralist paradigm

۴- Conclusion

References

Abstract

The purpose of this paper is to present the differences and similarities between corporate governance principles in Islamic banks and conventional banks by paradigmatic diversification. Corporate governance in Islamic banks is a social phenomenon in Islamic societies, the paper uses social theory paradigms (functionalist, interpretive, radical humanist and radical structuralist) to compare between corporate governance in Islamic banks and conventional banks. This paper shows that the existence of Islamic governance demonstrates that mainstream corporate governance is not a law of nature but a social construct.

Introduction

Corporate governance of banks has become an important area that needs to be given a further attention at global level, especially after the crisis of financial institutions in 2008 which influenced the stability of banks around the world (Haan and Vlahu ,2015), the financial institutions are highly interconnected due to the globalization and technological developments and policies of financial liberalization, which it inevitably triggers higher risks to the banking sector, in this regard the Basel Committee on Banking Supervision (2006) points out:1 ´´effective corporate governance practices are essential to achieving and maintaining public trust and confidence in the banking system, which are critical to the proper functioning of the banking sector and economy as a whole’’ ۱ , the governance in the banking sector should be designed so as to align the manager with the interests of debt holders including depositors. The corporate governance in Islamic banks is different from Conventional banks, it is unique and offers a particular structure guided by religious board which is Shariah supervisory Board (SSB), (Safieddine, 2009; Quttainah 2013), the Islamic Financial Services Board in Malaysia has defined the Shariah governance system in the following term“Shariah Governance System refers to the set of institutional and organizational arrangements through which an Institutions offering Islamic financial services ensures that there is effective independent oversight of Shariah compliance”۲ To analyze the similarities and differences between governance in Islamic banks and conventional banks, this paper use social theory through different paradigm (functionalist, interpretive, radical humanist and radical structuralist) to a deeper understanding of the nature and structure of corporate governance in Islamic banks and conventional banks.