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Accounting_ Religion and Organisational Culture Abstract 100128

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					          ACCOUNTING, RELIGION AND ORGANISATIONAL
               CULTURE: CREATING AN ISLAMIC BANK


                                   Christopher J. Napier

                           Royal Holloway, University of London


                                         ABSTRACT
When a new organisation is created, an opportunity arises to imprint the organisation with
a lasting culture.   If this culture is ambivalent, then tensions may persist within the
organisation as participants attempt to reconcile potentially inconsistent aims.      Such
tensions may arise in Islamic financial institutions, which need to adhere to the principles
of Sharia law (in particular, the avoidance of transactions involving the receipt or payment
of interest) while at the same time maintaining financial viability. This paper examines the
process of establishing and regulating Islamic banking in Jordan, through a case study of
the creation of Jordan Islamic Bank (JIB) in 1979. The foundation of JIB (the first Islamic
bank in Jordan and one of the earliest in the world) raised issues of how to regulate
Islamic banks and how to account for the special transactions developed in accordance
with Islamic principles. The political environment in Jordan was not favourable for
establishing Islamic banking, but JIB’s founder used the media and contacted public
figures to gain support for his ideas.    JIB was established through a special act that
contained accounting regulations conforming to Islamic principles.      Both religious and
secular considerations were involved in developing JIB’s special act.        The founder’s
experience in conventional banking and his search for an Islamic model that could
compete with conventional banking affected the way in which he developed the structure
of the bank’s main transactions. As a result, many of these were similar to those of
conventional banks. A particular problem in establishing an Islamic banking model and
regulating JIB was the existence of different schools of thought within Islam. Through the
process of establishing JIB, the founder achieved a regulatory structure that helped to
advance his ideas (which reflected an eclectic approach to Islamic schools of thought).

Key words: Islamic banking, Sharia, Jordan, bank regulation, mudaraba, muhasaba

Correspondence address: School of Management, Royal Holloway, University of
London, Egham, Surrey, TW20 0EX. Christopher.Napier@rhul.ac.uk