ISSN : 2765-6934
Purpose: The study aims to delineate Shariah Governance Framework (SGF) by applying the components of New Institutional Theory (NIT) to provide an understanding of how Islamic banks theoretically influence Shariah Governance (SG) practice, structure, and process. Design/methodology/approach: As it is a conceptual paper, this paper has prepared based on an analytical approach to show how such institutions could provide a more effective system concerning the contents, procedures, and practices for the multiple users in the SG process of Islamic banks. Findings: The paper critically explores the adoption of NIT to develop SGF with its existing practice, structure, and procedure. Utilizing NIT, a proposed theoretical framework has developed for exploring the SG through its major components, i.e., 'isomorphism' and 'legitimacy'. It is stated that NIT can offer a useful framework by which homogenous structures, comprising guidelines, standards, and practices become recognized and authorized as a satisfactory standard corporate exercise. Thus, the proposed theoretical framework would be beneficial in understanding and exploring the SGF. Conclusion: The application of this SGF could help to justify the key dimensions of NIT with its overall formation, function, and practices that might also help to attain legitimacy.
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