SHARIA MAQASHID INDEX AS A MEASURING PERFORMANCE OF ISLAMIC BANKING: A MORE HOLISTIC APPROACH

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Sri Hartono, Agus Sobari ORCID logo

https://doi.org/10.22495/cocv14i2c1p5

Abstract

So far, measurements of financial performance of Islamic banking is still predominantly still used by indicators of financial performance of conventional banking system. Its implication, many stakeholders, especially customers of Islamic banks. For Moslems are difficulty in measuring the benefits of the existence of Islamic banking. It is clearly due measure of success of Islamic banking course will be very different from conventional banking successes. If the benchmarks used today is still conventional, the consequences will be contained incorrect results of performance comparison of Islamic banking and conventional banking. Thus, both of the banking system becomes irrelevant and less apt to be compared directly. The size of Islamic banking performance should not directly benchmarking with conventional banking. It must be linked to the objectives and the establishment of Islamic banking noble intentions, namely to provide human well simultaneously implement the principles contained in sharia maqashid. This research will try to practice the measurement of financial performance based sharia maqashid and use it to make comparisons between the performance of the national largest-scale of Islamic commercial banks and regional small-scale of Islamic rural banks (BPR Syariah). This study presented using data from the financial statements of the three Islamic commercial banks and three Islamic rural banks (BPR Syariah). The results showed that the performance of the national largest-scale of Islamic commercial banks and regional small-scale of Islamic rural banks (BPR Syariah), all of them, has no a sharia maqashid index whose high value. This shows the inconsistency, that should be, the national largest-scale of Islamic banking to always focus on the muamalah objectives according by sharia. From the comparison of financial performance based on sharia maqashid, it turns out the national large-scale of Islamic commercial banks tend to have a lower index of sharia maqashid than the regional small-scale of Islamic rural banks (BPR Syariah).

Keywords: Sharia Maqashid Index, Islamic Financial System, Islamic Commercial Banks, Islamic Rural Bank (BPR Syariah).

JEL Classification: G21

Date received: 13 October 2016

Date accepted: 17 January 2017

How to cite this paper: Hartono, S., & Sobari, A. (2017). Sharia Maqashid Index as a measuring performance of Islamic banking: A more holistic approach. Corporate Ownership & Control, 14(2-1), 193-201. https://doi.org/10.22495/cocv14i2c1p5