Test Your Knowledge on Government Policy and Regulation in Islamic Banking

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Questions and Answers

What is the main role of banks as financial intermediaries?

To act as financial advisers and bankers of the government.

To issue currency and regulate financial institutions.

To solve market failures due to information asymmetry, economies of scale, and liquidity mismatches. (correct)

To promote a sound, progressive, and inclusive financial system.

Which regulatory body in Islamic finance and banking focuses on developing standardized Shari’ah-compliant financial documentation and guidelines?

International Islamic Financial Market (correct)

Central Bank of Malaysia

Islamic Financial Services Board

Accounting and Auditing Organization for Islamic Financial Institutions

What is the main function of the Securities Commission in Malaysia?

To formulate and conduct monetary policy.

To prepare accounting, auditing, governance, ethics, and Shariah standards.

To serve as an international standard-setting body.

To promote and maintain fair, efficient, secure, and transparent securities and futures markets. (correct)

Which legal governance act regulates Islamic financial services in Malaysia?

Islamic Finance Services Act 2013 Signup and view all the answers

What is the main role of the National Shariah Advisory Council in Islamic finance in Malaysia?

To act as the reference body and advisor to BNM on Shariah matters. Signup and view all the answers

Which regulatory body in Islamic finance and banking focuses on ensuring the soundness and stability of the Islamic financial services industry, including banks, capital markets, and insurance?

Islamic Financial Services Board Signup and view all the answers

Which Shariah governance framework sets out the expectations of the Bank on an IFI's Shariah governance structures, processes, and arrangements?

Shariah Governance Framework Signup and view all the answers

Which regulatory body in Islamic finance and banking prepares accounting, auditing, governance, ethics, and Shariah standards for the IFIs and participants?

Accounting and Auditing Organization for Islamic Financial Institutions Signup and view all the answers

Which regulatory body in Islamic finance and banking issues currency, regulates and supervises financial institutions, and provides oversight over money and foreign exchange markets?

Central Bank of Malaysia Signup and view all the answers

Which regulatory body in Islamic finance and banking facilitates the orderly development of an innovation and competitive capital market?

Securities Commission Signup and view all the answers

Which Shariah governance framework outlines the functions relating to Shariah review, Shariah audit, Shariah risk management, and Shariah supervisory review?

Shariah Governance Framework Signup and view all the answers

Which regulatory body in Islamic finance and banking holds and manages the foreign reserves of Malaysia?

Central Bank of Malaysia Signup and view all the answers

Study Notes

The Impact of Government Policy and Regulation on Islamic Banking

Banks have a dominant position in developing economy financial systems, are the most important source of finance for the majority of firms, and the main depository for the economy's savings.
Banks as financial intermediaries exist generally to solve market failures due to information asymmetry, economies of scale, and liquidity mismatches.
Regulatory bodies in Islamic finance and banking include the Central Bank of Malaysia (BNM), Securities Commission, Ministry of Finance, Islamic Financial Services Board (IFSB), International Islamic Financial Market (IIFM), and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
BNM was established in 1959 and has a mandate to formulate and conduct monetary policy, issue currency, regulate and supervise financial institutions, provide oversight over money and foreign exchange markets, promote a sound, progressive and inclusive financial system, hold and manage the foreign reserves of Malaysia, promote an exchange rate regime consistent with the fundamentals of the economy, and act as financial adviser, banker, and financial agent of the government.
The Securities Commission was established in 1993 with a mandate to promote and maintain fair, efficient, secure, and transparent securities and futures markets and facilitate the orderly development of an innovation and competitive capital market.
The IFSB serves as an international standard-setting body consisting of regulatory and supervisory agencies to ensure the soundness and stability of the Islamic financial services industry, including banks, capital markets, and insurance.
AAOIFI is an Islamic international autonomous not-for-profit organization that prepares accounting, auditing, governance, ethics, and Shariah standards for the IFIs, participants, and overall industry.
IIFM develops standardized Shari’ah-compliant financial documentation, product confirmations, and guidelines for the Islamic financial services industry, focused on the Islamic Capital & Money Market (ICMM) segment of the industry.
Legal governances in Islamic banking include the Central Bank Act 2009 (CBA), Islamic Finance Services Act 2013 (IFSA), Government Funding Act 2005, Capital Market and Services Act 2007, and Banking and Financial Institutions Act 1989.
Shariah governances include the National Shariah Advisory Council (NSAC), Shariah Governance Framework, and International Shariah Research Academic (ISRA).
NSAC is the highest Shariah authority in Islamic finance in Malaysia, established in May 1997, and acts as the reference body and advisor to BNM on Shariah matters.
The Shariah Governance Framework sets out the expectations of the Bank on an IFI's Shariah governance structures, processes, and arrangements to ensure that all its operations and business activities are in accordance with Shariah, provides comprehensive guidance to the board, Shariah Committee, and management of the IFI in discharging its duties in matters relating to Shariah, and outlines the functions relating to Shariah review, Shariah audit, Shariah risk management, and

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Description

Test your knowledge on the impact of government policy and regulation on Islamic banking with this informative quiz. Learn about the regulatory bodies and legal and Shariah governances in Islamic finance and banking, including their roles and responsibilities. Discover how these factors influence the soundness and stability of the Islamic financial services industry and the economy as a whole. Sharpen your understanding of the Central Bank of Malaysia, Securities Commission, Islamic Financial Services Board, and more. Take the quiz now and become an expert on the impact of