The Impact of Sharia Compliance on Banking Reputation Risks: An applied Study on Jordanian Islamic Banks

Abstract

Abstract

The study aimed to examine the impact of Sharia compliance with its dimensions (Sharia supervision, internal Sharia auditing, and work environment) on reputational risk in Jordanian Islamic banks.
To achieve its objectives, the study adopted an analytical descriptive approach. The study population comprised the Jordanian banking sector, with the sample consisting of (3) Jordanian Islamic banks. Statistical and inferential analyses were conducted using SPSS software.
The results revealed a statistically significant positive effect of Sharia compliance across its dimensions (Sharia compliance, Sharia supervision, and work environment (on mitigating reputational risk in Jordanian Islamic banks. The study recommended enhancing Sharia auditing processes by adopting modern technologies (e.g., artificial intelligence) to analyze financial transactions and detect Sharia violations. It also emphasized training auditors on the latest fatwas (Islamic rulings) and updates in Sharia standards.