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DEVELOPING ISLAMIC BANKING PERFORMANCE MEASURES BASED ON MAQASID AL-SHARI’AH FRAMEWORK: CASES OF 24 SELECTED BANKS

Journal of Islamic Monetary Economics and Finance

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Title DEVELOPING ISLAMIC BANKING PERFORMANCE MEASURES BASED ON MAQASID AL-SHARI’AH FRAMEWORK: CASES OF 24 SELECTED BANKS
 
Creator Mohammed, Mustafa Omar
Md Taib, Fauziah
 
Description Islamic banking has achieved remarkable growth that has surpassed the growth of the conventional banking system. Yet, studies show that the performances of Islamic banks (IBs) seem to be trailing behind the conventional banks (CBs). Is the poor performance of IBs the result of mismatch between their objectives and their performance measurement criteria or it is a reflection of their true performances? The objectives of Islamic banking had not been formally addressed. Mustafa and Taib (2009) derived the objectives of Islamic banking from Abu Zahara’s theory of the objectives of Shari’ah (Maqasid al-Shari’ah) and, based on these Shari’ah objectives, developed a model of Islamic banking performance measures. They named it as Performance Measures based on Maqasid al-Shari’ah framework or the PMMS model. This paper has tested the PMMS model on a sample 24 banks (12 IBs and 12 CBs). The twenty four banks were also evaluated using the traditional conventional financial measures. Mann-Whitney U-Test results show IBs faring well in their performances when measured using the PMMS model than when they are measured using the conventional banking performance yardstick. Policy prescriptions and recommendations for further studies are provided at the concluding section of the paper. 
 
Publisher Bank Indonesia
 
Date 2015-08-10
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://jimf-bi.org/index.php/JIMF/article/view/483
10.21098/jimf.v1i1.483
 
Source Journal of Islamic Monetary Economics and Finance; Vol 1 No 1 (2015): AUGUST; 55-77
2460-6618
2460-6146
 
Language eng
 
Relation http://jimf-bi.org/index.php/JIMF/article/view/483/451
 
Rights Copyright (c) 2015 Mustafa Omar Mohammed, Fauziah Md Taib