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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
"Accounting_ Religion and Organisational Culture Abstract 100128"