AN ANALYSIS OF SHARĪʿAH NON-COMPLIANT EVENTS IN ISLAMIC BANKS: EVIDENCE FROM MALAYSIA

Islamic banks (IBs) operate based on various Sharīʿah contracts, translated mostly into deposit and financing products. The validity of contracts, therefore, plays a central role in determining the Sharīʿah status of Islamic banking products and services. Failure to satisfy the contractual mechanical requirements will render the underlying transactions null and void, and any income derived therefrom cannot be recognized as profits.