Islamic Banking Reinterpretation of the Stakeholder Theory

Abstract

The Stakeholder theory has become one of the most important developments in the field of business ethics, which is widely regarded as being a key element in Islamic banking, making it of extreme relevance. While the stakeholder concept has evolved and gained prominence as a method of integrating ethics into the basic purposes and strategic objectives of the bank, authors argue that stakeholder theory has retained certain Western assumptions from the wider business literature that limit its usefulness. The use of Islamic banking provides a means of reinterpreting the stakeholder concept in a way that overcomes many of the existing limitations. This reading provides a different understanding of the identity and meaning of Islamic banking, specifically in terms of its relationship to stakeholder groups, such as Islamic banks are a connected body, they should have control over the external environment, and should implement hierarchies.

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