The Role of Islamic Accounting in the Banking Development of Islamic countries Case: Iraqi Islamic Banks

Abstract

AbstractToday, Islamic banks are facing great challenge to successfully serve the Islamicsocieties in a way to increase the economic growth significantly. The clients inMuslim countries around the world currently represent an enormous opportunity forthose willing to overcome financial challenges. The two dimension of Islamicaccounting where applied in this research; Islamic Cost Accounting and Amanah.Theproblem for search is the inability to identify the suitable accounting systems inIslamic banks operating in Iraq. Iraq is one of the Muslim countries that face a greatchallenge in dealing with lack of understanding to Islamic accounting system. Inaddition to that it is found that the functional models for utilizing Islamic products arenot effective to attract clients for Islamic accounting system. The aim of this study isto examine the relationship between ‘Islamic cost accounting’and ‘Amanah’ togetheron the development in banking sector in Iraq represented in economic growth. Theresult showed that the influence of these two variables on economic growth issignificant and important to Islamic banking in Iraq. It is concluded that the Islamic89financial accounting system is very important because it encourages investment alsoit improves capital allocation efficiency and the allocation of funds is a matter ofsuccess of the project.