Harmonizing and constructing an integrated maqa s id al-Sharīʿah index for measuring the performance of Islamic banks

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Year: 2019


This publication is part of the journal (2019-2)

Purpose – This paper aims to develop a performance measure for Islamic banks (IBs) by harmonizing

related studies. Furthermore, this work uses the developed yardstick to analyze the performance of a sample

of 11 IBs from across different countries.

Design/methodology/approach – This paper uses the mix-mode method. The qualitative

approach is engaged first to construct the IBs performance yardstick. Following this, the quantitative

approach is applied through the use of the performance yardstick to measure the sample’s

performance.

Findings – This study develops a maqasid-based performance yardstick adapted from previous works. The

developed model in this study is called an integrated maqasid al-Sharīʿah–based performance measure

(IMSPM). By using this performance measure, the present paper finds that the sample performed highest on

the objective of nafs (self) over the three-year period. In addition, this study identifies the information which

best indicates the sample’s performance during the analysis.

Research limitations/implications – This paper uses the sample’s annual reports. The analysis is

thus limited to informational disclosure.

Practical implications – Islamic banking and financial institutions may use the IMSPM to

communicate a measurable report on their promotion of the maqasid al-Sharīʿah (objectives of Islamic

law).

Social implications – The evidence from 11 IBs is indicative of their efforts to realize maqasid al-Sharīʿah

in the banking industry. This point may best challenge the practice of stigmatizing IBs for not being in line

with the Sharīʿah (Islamic law) or of imitating conventional banks.

Originality/value – The novelty of this study lies in two points. First, this study harmonizes previous

works to integrate financial and religious measures in a single yardstick. Second, by using the developed

standard, this study offers a fresh insight into the global IBs’ performance, represented by 11 IBs worldwide.


 

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