Leadership and Governance of Islamic Financial Institutions in Malaysia

Abstract

Some corporate failures such as Enron and WorldCom were due to mismanagement and frauds committed by the top management of the organization and even the external auditors. Leadership was cited as one of the factors that led to the collapse of Enron. The Islamic financial institutions discussed in this paper focuses on Islamic banking and Takaful sectors. In both sectors, the level of governance has not received an extensive coverage as most studies have the tendency to focus on the people’s perceptions and acceptance towards the respective sectors as well as its product offering. This paper incorporates two aspects; firstly, leadership from the theoretical perspective such as traits, behaviour, and contingency theory. Secondly, this paper also reviewed governance from the conventional practices as well as from the Islamic viewpoints. The final section of the paper presents the existing studies on leadership and governance and explains the significance of this study.