Basel Iii: Impact and Challenges to Islamic Financial Institutions: Evidence of Pakistan and Malaysia

The global financial crises 2007 bring about the current banking regulations which stood inadequate to avoid banks from taking in unnecessary risk actions. Therefore, Bank for International Settlement (BIS) and G-20 leaders endorsed a new international standard of banking regulations by revising previous Basel II rule, introduced in 2004, into Basel III in late 2010, so as to enhance the quality including quantity of capital, leverage ratio and liquidity standards, which has become a challenge for nationals to implement these strict reforms under their existing banking system. Parallel with the conventional banking system, for which the Basel Committee formulated Basel framework, Islamic banking introduced in early 1977 to 1980 in Pakistan in response to the decision by the Shariat Bench of Supreme Court, necessitates that the financial system be transformed to operate in conformity with sharia. The State Bank of Pakistan (SBP) and Bank Negara Malaysia are the regulator of Islamic banks and full member of IFSB. The Islamic Financial Services Board (IFSB) established in 2002 in Malaysia as an international standard-setting organization to enforce the international regulatory and supervisory guidelines for Islamic financial organizations along with other standard setting bodies such as AAOIFI and ISDB to achieve this objective. The IFSB promotes the stability and soundness of the Islamic financial institutions by issuing guiding standards and prudential regulations for the industry, The IFSB applied Basel standards in the context of Islamic banks and its operating models. This paper critically evaluates Islamic financial institution’s regulatory and supervisory structures particularly for Pakistan and Malaysia and examines financial position after implementing Basel Accord rules. Study suggests a positive impact in case of both countries.

Sociological Study of Behavioral Change in Textile Manufacturing Organizations of Punjab, Pakistan: in Context of Global Business Culture

The prime objective of the research was to study the diffusion process and impact of the global business culture being brought by globalization on local business culture, which has longstanding roots. Several variables like age, education, income, marital status, family living pattern and background of the respondents were seen in the context of global business culture in order to measure the impact and duration of change. Some intervening variables like stress, motivation and rewards, achievement and encouragement, planning and decision making, performance appraisal system, politics, training and development, acceptance and adoption towards change, level of understanding other culture, loyalty and commitment and perception, were also analyzed in pursuit of the study objectives. The study was conducted in 100 export based textile organizations by selecting five personnel of upper and middle levels from each organization, who selected randomly. Quantitative approach used in this study to assess the impact of the global culture on local business. A random sampling design was used for the selection of employees from all the organizations. Pre-testing was carried out to examine the workability of the measuring instrument. The data were analyzed by appropriate statistical techniques including univeriate, biveriate, and multiple linear regression analysis through Statistical Package for Social Sciences (SPSS). Findings showed that several independent and intervening variables effect on behavior of people who were working in export base textile organizations. Findings revealed that employees, under global business culture, have become more planed, systematic and scientific in their attitudes. This was also emerged from analysis that survival in business organizations demands adoption and changes in behaviour. It is suggested that government should formulate comprehensive policies to create strong relationship between social scientists and business managers for maximum productivity from the global culture. It is also suggested that business organizations must incorporate monetary and non monetary benefits to the employees who adopt modern values for organizational benefits and also disseminate it.