Financial Reporting and Analysis in Islamic Banking

For an Islamic bank, financial accounting plays an important role in the regulation and supervision of financial institutions, the development of market discipline, and the establishment of an integrated harmony between the various stakeholders involved in banking activities. In this way, the stakeholders can obtain reliable information for the purpose of assessing an Islamic bank's financial performance and syari'ah compliance; the bank itself would also be able to refer to the financial reports in figuring out the rights and responsibilities of every party with whom it must interact. Chapter 5 particularly covers the Islamic bank's financial statement and the related analysis. In this chapter, we will explore the details related to the structure of financial statements (on‐balance sheet, income statement, off‐balance sheet, etc), the philosophy of financial statement construction, the available financial statement analysis tools, and how to integrate financial statement analysis into the risk management framework.