Performance evaluation index for Islamic banks based on Maqasid al-Shariah

The upsurge of Islamic banking has always been seen from the perspective of growth of assets and market share which somehow depict the profit oriented nature of a business entity. “Riba free banking” seems to be the only factor that differentiates Islamic banking from its conventional counterpart. A...

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Main Authors:	Islam, Rafikul, Mohamed, Mustafa Omar, Tarique, Kazi Md., Radzuan, Ummi Nasyrah, Abdul Razak, Dzuljastri, Hamdan, Hamdino
Format:	Monograph
Language:	English English
Published:	2018
Subjects:	HG3368 Islamic Banking and Finance
Online Access:	http://irep.iium.edu.my/62132/ http://irep.iium.edu.my/62132/1/Main%20write%20up_Performance%20evaluation%20of%20Islamic%20banks.docx http://irep.iium.edu.my/62132/2/FRGS%20project%20approval.pdf

id	iium-62132
recordtype	eprints
spelling	iium-621322019-02-03T11:36:00Z http://irep.iium.edu.my/62132/ Performance evaluation index for Islamic banks based on Maqasid al-Shariah Islam, Rafikul Mohamed, Mustafa Omar Tarique, Kazi Md. Radzuan, Ummi Nasyrah Abdul Razak, Dzuljastri Hamdan, Hamdino HG3368 Islamic Banking and Finance The upsurge of Islamic banking has always been seen from the perspective of growth of assets and market share which somehow depict the profit oriented nature of a business entity. “Riba free banking” seems to be the only factor that differentiates Islamic banking from its conventional counterpart. As a result, the true objective of Islamic banking which is the fulfillment of “Maqasid al-Shari’ah” (Objective of Islamic law) have not been formally addressed. Currently, Islamic banks are being evaluated using the same conventional standards of other banks which mainly focus on financial measures. Hence, a paradigm shift is required in the Islamic banking industry where the framework of Maqasid al- Shari’ah is used for performance evaluation. The objective of this study is to develop a Maqasid al-Shari’ah based index by operationalising the Maqasid framework that combines the Maqasid theories of Imam al Ghazali and Abu Zaharah. At first, semi-structured interviews of 12 experts on Islamic banking and finance (IBF) were conducted to select the variables for indexing. Afterwards, a focus group discussion was arranged consisting five experts in IBF to validate the selected variables. Then, an analytic hierarchy process (AHP) is employed to determine the relative importance and weight of each Maqasid item and sub-items. The respondents in this case are industry experts, Shari’ah scholars, Shari’ah committee members and academics. Based upon this, an index is developed. Afterwards, the index is tested on 11 selected sample banks in Malaysia and Bangladesh. The result reveals that RHB Islamic bank rank top among the selected Islamic banks. This study contributes to the theory of Maqasid al-Shari’ah with respect to banking performance evaluation by identifying the necessary variables to operationalize Maqasid items. The Maqasid-based index is expected to assist stakeholders to measure how far the performance of Islamic banks are in line with the Maqasid al-Shari’ah. 2018 Monograph NonPeerReviewed application/pdf en http://irep.iium.edu.my/62132/1/Main%20write%20up_Performance%20evaluation%20of%20Islamic%20banks.docx application/pdf en http://irep.iium.edu.my/62132/2/FRGS%20project%20approval.pdf Islam, Rafikul and Mohamed, Mustafa Omar and Tarique, Kazi Md. and Radzuan, Ummi Nasyrah and Abdul Razak, Dzuljastri and Hamdan, Hamdino (2018) Performance evaluation index for Islamic banks based on Maqasid al-Shariah. Research Report. UNSPECIFIED. (Unpublished)
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HG3368 Islamic Banking and Finance
spellingShingle	HG3368 Islamic Banking and Finance Islam, Rafikul Mohamed, Mustafa Omar Tarique, Kazi Md. Radzuan, Ummi Nasyrah Abdul Razak, Dzuljastri Hamdan, Hamdino Performance evaluation index for Islamic banks based on Maqasid al-Shariah
description	The upsurge of Islamic banking has always been seen from the perspective of growth of assets and market share which somehow depict the profit oriented nature of a business entity. “Riba free banking” seems to be the only factor that differentiates Islamic banking from its conventional counterpart. As a result, the true objective of Islamic banking which is the fulfillment of “Maqasid al-Shari’ah” (Objective of Islamic law) have not been formally addressed. Currently, Islamic banks are being evaluated using the same conventional standards of other banks which mainly focus on financial measures. Hence, a paradigm shift is required in the Islamic banking industry where the framework of Maqasid al- Shari’ah is used for performance evaluation. The objective of this study is to develop a Maqasid al-Shari’ah based index by operationalising the Maqasid framework that combines the Maqasid theories of Imam al Ghazali and Abu Zaharah. At first, semi-structured interviews of 12 experts on Islamic banking and finance (IBF) were conducted to select the variables for indexing. Afterwards, a focus group discussion was arranged consisting five experts in IBF to validate the selected variables. Then, an analytic hierarchy process (AHP) is employed to determine the relative importance and weight of each Maqasid item and sub-items. The respondents in this case are industry experts, Shari’ah scholars, Shari’ah committee members and academics. Based upon this, an index is developed. Afterwards, the index is tested on 11 selected sample banks in Malaysia and Bangladesh. The result reveals that RHB Islamic bank rank top among the selected Islamic banks. This study contributes to the theory of Maqasid al-Shari’ah with respect to banking performance evaluation by identifying the necessary variables to operationalize Maqasid items. The Maqasid-based index is expected to assist stakeholders to measure how far the performance of Islamic banks are in line with the Maqasid al-Shari’ah.
format	Monograph
author	Islam, Rafikul Mohamed, Mustafa Omar Tarique, Kazi Md. Radzuan, Ummi Nasyrah Abdul Razak, Dzuljastri Hamdan, Hamdino
author_facet	Islam, Rafikul Mohamed, Mustafa Omar Tarique, Kazi Md. Radzuan, Ummi Nasyrah Abdul Razak, Dzuljastri Hamdan, Hamdino
author_sort	Islam, Rafikul
title	Performance evaluation index for Islamic banks based on Maqasid al-Shariah
title_short	Performance evaluation index for Islamic banks based on Maqasid al-Shariah
title_full	Performance evaluation index for Islamic banks based on Maqasid al-Shariah
title_fullStr	Performance evaluation index for Islamic banks based on Maqasid al-Shariah
title_full_unstemmed	Performance evaluation index for Islamic banks based on Maqasid al-Shariah
title_sort	performance evaluation index for islamic banks based on maqasid al-shariah
publishDate	2018
url	http://irep.iium.edu.my/62132/ http://irep.iium.edu.my/62132/1/Main%20write%20up_Performance%20evaluation%20of%20Islamic%20banks.docx http://irep.iium.edu.my/62132/2/FRGS%20project%20approval.pdf
first_indexed	2023-09-18T21:28:05Z
last_indexed	2023-09-18T21:28:05Z
_version_	1777412326713982976

Performance evaluation index for Islamic banks based on Maqasid al-Shariah

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