Maqasid Sharia-Based Performance Improvement Model: A Case Study in Islamic Banks in Indonesia

Kartika, Indri; Kiryanto, Kiryanto; Cahyaningtyas, Rahayu Nur

doi:10.30659/ijibe.7.1.16-29

Cited by 3 publications

(2 citation statements)

References 26 publications

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“…id based performance of Islamic banks in different countries. Hudaefi & Badeges (2022), Kartika et al (2022), Mahyudin &Rosman (2022), andTarique et al (2021) use the maqās . id al-Sharī'ah Index along with other conventional methods to compare the performance of Islamic banks in different jurisdictions.…”

Section: Maqās Id Al-sharī'ah Based Indexmentioning

confidence: 99%

Performance Analysis of Islamic Banking in Pakistan Using DEA Technical Efficiency and Maqasid-e-Shariah Index

Ali,

Hussain,

Sheikh

2023

J. Islam. bus. manag.

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Purpose: The goal of Islamic banking is to offer Shariah compliant products along with ultimate objective of high performance. We question whether Islamic banks are able to achieve the Shariah objectives as well as the efficiency. Design/Methodology/Approach: We use Maqasid-e-Shariah index (MSI) to assess the level of Shariah compliant and DEA technical efficiency score to measure the performance of Islamic banks in Pakistan. Results of efficiency and MSI scores are combined and plotted on four quadrants. Since the best bank is set as benchmark, the study provides relative results not absolute. Findings: The study has four main findings based on the results. Meezan Bank falls in quadrant 1 which achieves highest level of technical efficiency and high level of MSI score. Bank Islami and Al-barakah Bank fall in quadrant 2 which depicts that both banks achieve high technical efficiency but low MSI scores. Dubai Islamic Bank falls in quadrant 3 having low score in technical efficiency and high score in MSI. Quadrant 4 has the lowest level in both the technical efficiency and MSI. None of the banks falls in this quadrant. Although, Meezan Bank achieves the highest level of MSI, nevertheless all banks are required to improve the MSI scores. Originality/Significance: Large number of studies uses the DEA approach to measure the efficiency of Islamic banks. On the other hand, another set of research studies prefer MSI approach to determine the efficiency of Islamic banks. To the best of our knowledge, this is perhaps the first study in Pakistan, which uses both approaches to compare the technical efficiency and Maqasid-e-Shariah based efficiency of Islamic banks. Practical and Social Implications: Since all Islamic banks are meant to achieve highest possible level of Maqasid-e-Shariah, the management of these banks has to focus on improving MSI scores along with highest technical efficiency. In this regard, the paper provides insight to management, Shariah advisors and regulators in the performance of Islamic banking from both conventional and Shariah aspects.

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Section: Maqās Id Al-sharī'ah Based Indexmentioning

confidence: 99%

Performance Analysis of Islamic Banking in Pakistan Using DEA Technical Efficiency and Maqasid-e-Shariah Index

Ali,

Hussain,

Sheikh

2023

J. Islam. bus. manag.

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“…Islamic banking is founded on Shariah principles, which support fair wealth distribution, moral and responsible financial behavior, and economic stability (Kartika et al, 2022;Kamri et al, 2014). These principles align closely and share similar objectives with the SDGs in terms of eradicating poverty, promoting gender equality, maintaining environmental sustainability, and fostering inclusive economic growth (Abdul Rahim et al, 2023).…”

Section: Introductionmentioning

confidence: 99%

The SDG-Islamic Banking Nexus: Insights from the OIC Top Economies

Basalma

2024

SJEKI

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– Islamic Banking and Finance (IBF) has emerged as a promising alternative to conventional finance, with its principles aligned with the United Nations' Sustainable Development Goals (SDGs). This study investigates the relationship between the performance of IBF in five major Organization of Islamic Cooperation (OIC) countries - Saudi Arabia, Turkey, Indonesia, Malaysia, and the United Arab Emirates - and key SDG indicators: return on assets, regulatory capital to assets, regulatory Tier 1 capital to risk-weighted assets, and broad money to total reserves ratio. Employing panel data analysis, the research reveals that three out of the four SDG indicators significantly impact the total assets of Islamic banks, while the regulatory capital-to-assets indicator shows no significant relationship. These findings underscore the complex interplay between profitability, risk management, liquidity, and asset growth in the IBF sector. The study contributes to the growing body of literature on the role of IBF in promoting sustainable development. The results have important implications for regulators, policymakers, and Islamic banking institutions, highlighting the need for a balanced approach that reconciles financial performance with social and environmental objectives. By aligning IBF with the SDGs, this research paves the way for a more sustainable and inclusive financial system that can drive economic growth, social welfare, and environmental sustainability in the Muslim world and beyond.========================================================================================================ABSTRAK – Hubungan SDG dengan Perbankan Syariah: Wawasan dari Negara-Negara Utama OKI. Perbankan dan Keuangan Syariah telah menjelma menjadi alternatif yang menjanjikan bagi keuangan konvensional, dengan prinsip-prinsipnya yang selaras dengan tujuan pembangunan berkelanjutan (SDGs). Penelitian ini menyelidiki hubungan antara kinerja total aset perbankan dan keuangan Islam di lima negara utama OKI, yaitu Saudi Arabia, Turkey, Indonesia, Malaysia, and the United Arab Emirates, dan beberapa indikator SDG yaitu laba atas aset, modal peraturan terhadap aset, peraturan modal Tier 1 terhadap aset tertimbang menurut risiko, dan uang beredar terhadap total cadangan. Studi ini menggunakan pendekatan analisis data panel yang mengumpulkan regresi kuadrat terkecil biasa menggunakan data sepuluh tahun dari tahun 2013 hingga 2022. Hasilnya menunjukkan bahwa tiga dari empat indikator SDG mempunyai dampak signifikan terhadap total aset perbankan syariah, sedangkan peraturan modal terhadap total aset perbankan syariah tidak berpengaruh signifikan terhadap total aset perbankan syariah. Temuan ini menunjukkan adanya trade-off antara profitabilitas, manajemen risiko, likuiditas, dan pertumbuhan aset di perbankan syariah. Temuan ini mempunyai implikasi bagi regulator, pembuat kebijakan, dan lembaga perbankan Islam, serta berkontribusi terhadap pemahaman keuangan yang bertanggung jawab dan pembangunan berkelanjutan.

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Capturing Islamic bank performance in Indonesia during the COVID-19 crisis: RGEC and SCNP approaches

Hanif Noor Athief,

Ahmad Zaky,

Virgiawan

et al. 2024

Banks and Bank Systems

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While adhering to the unique principle of Islamic value, Islamic banks are subject to any occurring crisis, just like other banks in common. After the end of the COVID-19 crisis, it is important to determine whether Islamic banking can demonstrate its resilience based on the unique values it upholds. Therefore, the primary objective of this study is to capture how Islamic banks performed during the unprecedented challenge posed by COVID-19. By utilizing the data generated from financial reports, this study employs the RGEC (Risk Profile, Good Corporate Governance, Earnings, and Capital) method that was introduced by Indonesia Central Bank and SCnP (Sharia Conformity and Profitability) measurement. The findings show that by utilizing RGEC, the study classifies Islamic banks into tiers of health, distinguishing 7 as very healthy, 5 as healthy, and 2 as fairly healthy. Meanwhile, SCnP sheds light on the balance between Sharia conformity and profitability, highlighting 2 Islamic banks with commendable equilibrium, 5 displaying a tilt towards high profitability and low conformity, 4 with a tendency towards Shariah conformity with low profitability, and 3 struggling with challenges in both aspects. The study concludes the overall financial resilience of the majority of Islamic banks in Indonesia during the pandemic while noting that some banks faced challenges in achieving a harmonious balance between profitability and Sharia conformity.

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Maqasid Sharia-Based Performance Improvement Model: A Case Study in Islamic Banks in Indonesia

Cited by 3 publications

References 26 publications

Performance Analysis of Islamic Banking in Pakistan Using DEA Technical Efficiency and Maqasid-e-Shariah Index

Performance Analysis of Islamic Banking in Pakistan Using DEA Technical Efficiency and Maqasid-e-Shariah Index

The SDG-Islamic Banking Nexus: Insights from the OIC Top Economies

Capturing Islamic bank performance in Indonesia during the COVID-19 crisis: RGEC and SCNP approaches

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