Haq, Farooq

m.f.haq@lse.ac.uk

The Role of Information Systems in Islamic Banking: an ethnographic study

(2005)

Banks exist because of their ability to achieve economies of scale in reducing asymmetry of information between savers and borrowers. Banks are dealers of information and their intermediary role makes them important to an economic system. Banking as we know it today is governed by a capitalist philosophy.

However the last two decades have witnessed a significant growth of a banking practice, ie Islamic banking, which is based on the principles of the Islamic religion. The Islamic banking system came into existence to fulfil the economics needs of Muslims who are supposed to lead their lives according to shariah guidelines.

This research studies the practice of Islamic banking from an information systems perspective. More specifically, the focus is on if and why the role of information systems differs in Islamic banks. Information is no less important to conventional banks but how is the role played by information systems different in and for Islamic banks?

I studied the existing practice of Islamic banking primarily by borrowing concepts from the work of Berger and Luckman's (1996) 'Social construction of reality: a treatise in the sociology of knowledge'. This was complemented by notions of 'culture' and religion', and they were employed to understand the current practice of Islamic banking.

The research adopted an interpretive approach using an ethnographic case study technique to gather information accompanied by other methods of data collection to have data triangulation. Islamic banks have their own well-defined culture and because this research is interested in how culture affects information creation I have selected ethnography as the preferred method of data collection and analysis.

This research endeavour primarily focuses on the 'role of information systems within the industry of Islamic banking', where role represents the responsibilities assigned to the concept of information within the research context highlighting the social construction of information. I have explored the issue of transparency within the industry of Islamic banking and the role that information plays in enhancing its process. The findings indicate strongly that the role of information in Islamic banks differs culturally in terms transparency in the relationship between the bank and its customers.

Supervisor: Dr S Smithson

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