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Islamic banks are banks that are set up to operate within the Islamic business framework that is more equitable and based on socio-economic welfare of the society and the people. In Islamic law on commercial transactions and other related contractual activities (the framework), transparency and adequate disclosure are the fundamental determinants of a successful and peaceful relationship between the contracting parties. This is because the stakeholders of Islamic banks believed that the prescriptions of the framework would be the key determinants of the bank’s Ethical Identity Disclosures (EID). This study aimed at exploring and identifying the practical determinants of EID in Islamic banks. Disclosure information in annual reports (from 2007 to 2011) of 21 Islamic banks operating in Bahrain and Malaysia was gathered and analysed using Ethical Identity Index (EII) and Multiple Regression Analysis (MRA) models. The results of EII and MRA on nine ethical disclosure dimensions consisting of 80 constructs and 4 assumed determinants of EID among Islamic banks indicated that EID of both countries is low and that independent directors do not affect the level of social disclosure. However, board size, Shari’ah supervisory Board and investment account holders can significantly influence the disclosure level in Islamic banks. Hence, we conclude that our findings are in conflict with main theories such as agency theory, however supports institutional theory. Keywords: Ethical identity disclosure; determinants; Islamic Banks; Bahrain; Malaysia ABSTRAK Kajian ini bertujuan untuk meneroka dan mengenalpasti penentu-penentu yang praktikal berkaitan Etika Pendedahan Identiti(EID) di bank-bank Islam. Laporan tahunan bagi tempoh 5 tahun (2007-2011) bagi 21 bank-bank Islam yang beroperasi di Bahrain dan Malaysia, telah dikumpulkan dan dianalisa. Kajian menggunakan Indeks Etika Pengenalan (EII) dan model Analisa Regresi Berganda (MRA). Hasil analisa EII dan MRA ke atas sembilan dimensi etika pendedahan yang terdiri daripada 80 konstruk dan 4 penentu andaian EID di kalangan bank-bank Islam menunjukkan bahawa, EID di kedua-dua negara adalah rendah dan pengarah bebas tidak memberi kesan kepada tahap pendedahan sosial. Walau bagaimanapun, saiz lembaga pengarah, lembaga penasihat syariah dan pemegang-pemegang akaun pelaburan boleh mempengaruhi tahap pendedahan dalam bank-bank Islam. Kesimpulannya penemuan kajian ini adalah bertentangan dengan teori-teori yang sedia ada seperti teori agensi dan menyokong teori institusi. Kata kunci: Etika pendedahan identiti; penentu-penentu; bank-bank Islam; Bahrain; Malaysia
Rahman et al. (Fri,) studied this question.