Methodology of Global Islamic Finance Awards
The objective of the Global Islamic Finance Awards (GIFA)is to highlight the best practices in Islamic banking and finance and celebrate the success of institutions and individuals, with an ultimate objective of promoting social responsibility, Shari’a authenticity and commitment to Islamic banking and finance.
The decision on the winners for GIFA developed by Edbiz Consulting is based on an objective proprietary methodology. Each year, GIFA nominations are announced in the second or third quarter and remain open till the end of the third quarter of the year, or later if no clear winners emerge.
At the heart of the selection methodology is the comprehensive research undertaken by Edbiz Consulting. There are two ways nominations are determined. The first is where nominations are accepted from industry players who would like to be considered for a GIFA in a particular category. This is the case for “Self Nominations.” The second is where the research team recommends to the Nominations Committee the names of the institutions and individuals, which their research supports for a GIFA. This is known as “Edbiz Nominations.”
Each category may have up to five nominations. The nominees’ identities may be kept confidential if the confirmed participating nominees prefer so.
Edbiz nominees are informed by Edbiz Consulting of their nominations. This is normally done 3-6 months ahead of the final decision. During this time, the research team closely monitors the performance of nominees to make final recommendations to the Awards Committee. Both the Nominations Committee and Awards Committee are chaired by Professor Humayon Dar. Other members of the two committees do not overlap. The compositions of the two committees are kept confidential to ensure complete independence of the decision making process. The two committees comprise of some renowned academicians with research interests in Islamic economics, banking and finance.
The GIFA Awards Committee attempts to ensure complete transparency in terms of the following:
Those products and services will be rewarded, which contribute to growth of Islamic finance through innovative applications of Shari’a principles. Key changes to the existing strategies for the development of Islamic finance will also be treated with favour.
Quantity and Quality
The breadth and depth of product/service offerings and, where applicable, performance data are taken into account when assessing the performance of the nominated institutions and individuals during the Award Period.
Provision of products/services that take on an international dimension outside of the established home market is also a major criterion for selection of nominations.
Promotion of the Growth of the Industry
Products/services that have established standards of best practice for the national markets and global Islamic financial services industry are also treated over and above other products.
In addition to the above, we welcome any material from the institutions that may help the Awards Committee to assess the winners in the relevant categories. Also, in certain cases the Award Committee would invite Islamic financial institutions, investors, and the corporate and government bodies around the world to cast their votes.
If the performance related information is not received from the nominated organization or individual, the Awards Committee/Edbiz Consulting will utilize data compiled by the Islamic Finance Information Service (IFIS) http://www.securities.com/ifis/ or any other publically available data.
On top of our Selection Criteria we have:
- Social Responsibility
- Shari’a Authenticity
- Commitment to Islamic Banking and Finance
The above three factors receive 100 points in total: Social Responsibility (33); Shari’a Authenticity (33), and Commitment to Islamic Banking & Finance (34)
An organization is considered Socially Responsible if it makes continuing efforts to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.
An organization is considered Shari’a authentic if it commits itself to the Shari’a Standards issued by an independent body like the Accounting and Auditing Organisation for Islamic Finance Institutions (AAOIFI) or a national body set up to issue Shari’a guidelines. Preference is given to AAOIFI: an organization which offers products in compliance with AAOIFI Shari’a Standards may get maximum 33 points, while an organization complying with the Shari’a guidelines of a national body may only get a maximum of 25 points. The organizations that comply with the Shari’a guidelines of their own Shari’a Boards may receive a maximum of 20 out of the total of 33.
Commitment to Islamic Banking & Finance
Our Selection Criteria allocate a maximum of 34 points to fully-fledged stand-alone Islamic banks and financial institutions. Other institutions offering Islamic financial services are allocated points out of 34 according to the following:
A separate legal subsidiary of a conventional financial institution: 25
An Islamic window operating separate Islamic business (e.g., Islamic windows): 20
An Islamic window operating its operations through its mainstream business: 15
The above-mentioned criteria are then augmented with:
- Quantity and Quality
- Cross Border
- Promotion of the Growth of Industry
Each of the above criteria is given equal points (25) aggregating 100.
Thus, we have a total of 200 points that an organization can obtain. Those nominees who receive the maximum points in a category win the Award in that category. In case the first winner wants to withdraw, the Award is given to the runners up.
The above criteria are used to choose winners in individual categories. In some categories, the above weights are different. For example, in the category of Islamic Social Responsibility Award, Social Responsibility is given 100 points and the other weights may also be changed, because these may not be entirely relevant to the participating organizations. This year’s winner, Islamic Relief Worldwide, succeeded because of its obvious commitment to social responsibility, its innovative approach to charity work (especially in the field of Islamic microfinance) and the quantum of its relief works in a number of countries.
The following exponential formula is used to evaluate the nominations. The nominee in a givencategory, obtaining the highest score wins.
where i and j are the weights assigned to Xi and Yi variables, respectively.
X1 (Innovation) = Number of new products in case of the institutions / individuals and number of new features in case of the products
X2 (Quantity and Quality) = X21 + X22
X21 = Number of products
X22 = Quality of products (i.e., plain vanilla, complicated, sophisticated etc.)
X3 (Cross Border Products / Transactions) = 1 if the product in question is a cross border transaction; 0 otherwise. In case of institutions, actual number of cross border products and transactions is used
X4 (Promotion of the Growth of the Industry) = Number of conferences, seminars, and other events attended / sponsored; other forms of patronage of the industry like membership of the Islamic finance bodies like AAOIFI, IFSB etc is also included
Y1 (Social Responsibility) = Amount contributed to social causes
Y2 (Shari’a Authenticity) = 0.33 for AAOIFI compliancy; 0.25 for national body compliancy; and 0.2 for Shari’a board compliancy
Y3 (Contribution to Islamic Banking & Finance) = 0.34 for stand-alone fully-fledged Islamic financial institutions; 0.25 for independent subsidiaries of Islamic financial institutions; 0.20 for an Islamic window with adequate segregation of business and operations (e.g., through Islamic branches); 0.15 for Islamic windows without dedicated Islamic branches.