From faith to action: a perceptual assessment of social commitments of Islamic finance

PurposeThis study aims to examine Islamic banks' (IBs') obligations to uphold society's moral and ethical dimensions. Furthermore, it explores the perspectives of practitioners and Shariah scholars on the role of IBs as agents to advance social and ethical well-being.Design/methodology/approachQualitative methodology, with constructivist philosophy, was used. Semi-structured interviews were conducted with Shariah scholars and Islamic banking officials in Pakistan. The thematic analysis uncovered diverse dimensions catering to fulfill the requirements of social and ethical upliftment of society.FindingsThe study reveals discrepancies in the perception of IBs' advisory board members and managers regarding the social responsibilities of IBs. Results show that practitioners of IBs disregard the overall societal welfare upliftment and faith and spiritual upliftment as a responsibility of IBs. However, they consider the inclusiveness, transparency and assurance of Hifz-e-Maal (safeguarding the wealth) among the prime duties of IBs.Practical implicationsThis study serves as a call for policymakers, emphasizing that, to achieve the desired social outcomes, it is imperative to address the perceptual inconsistencies among stakeholders of the Islamic financial system.Social implicationsThis study compels policymakers to confront perceptual inconsistencies in Islamic banking, advocating for regulations that guarantee wider societal welfare and spiritual advancement in addition to financial objectives.Originality/valueThis study could help broaden the understanding of the Islamic financial system, particularly the aspects that may hamper getting the desired results of this system.