Using Integrated Reporting to Disclose the Value-Based Intermediation Information: Evidence from Islamic Banking Industry

Abstract

Creating value for stakeholders is a crucial goal for many organisations, including Islamic
banking institutions. Value-Based Intermediation (VBI) is the most recent initiative issued by
Bank Negara Malaysia to improve the role of Islamic banks towards achieving innovation,
transparency, financial stability and sustainable growth. This paper aims to shed light on the
VBI disclosure practices among Islamic banks in Malaysia and analyse the use of integrating
reporting (IR) framework to communicate VBI information to stakeholders. The content analysis
has been conducted on the annual reports of 16 Islamic banks in Malaysia to collect the data for
the years 2017 and 2018. The findings showed that the IR framework, including business model,
could present the VBI disclosures in a concise, holistic and efficient way in comparison to
conventional reporting approaches. Furthermore, there is an increase in the implementation of
VBI and IR among Islamic banks. Almost 69% of all Islamic banks have VBI disclosures in their
2018 annual reports. Nearly half of these banks used IR to report their VBI disclosures. This
study contributes to the literature by providing critical insights to management, analysts,
investors and policymakers in improving the VBI disclosure through IR as a new practice in the
Islamic banking industry.