The Role of Islamic Banks in Transparency and Economic Stability

Abstract

Islamic banks play an important role in promoting economic stability through financial intermediation practices based on ethical, fair, and transparent sharia principles. Financial statements are a crucial instrument in maintaining credibility and public trust in Islamic banks, particularly in demonstrating compliance with accounting standards and sharia principles. However, the implementation of transparency in financial reporting still faces several challenges, including the complexity of sharia products, differences in accounting standards, low levels of financial literacy in society, as well as limitations of human resources mastering sharia accounting principles. This study applies a literature review approach to examine the role of financial statements in enhancing transparency, identifying existing challenges, and highlighting their contribution to inclusive economic growth. The findings indicate that transparent financial statements not only increase investor and depositor confidence but also strengthen the stability of the global Islamic financial system. Therefore, the reinforcement of governance, literacy, and digitalization is considered the key to ensuring the sustainability of Islamic banks in the modern era.