A Comparative Analysis of the Maqasid Shariʾah of Islamic Banks in Malaysia, Indonesia and the Gulf Cooperation Council Countries

Ngalim, Siti Manisah; Ismail, Abdul Ghafar; Yaakub, Noor Inayah

doi:10.2307/j.ctt1df4hjh.14

Cited by 5 publications

(5 citation statements)

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“…In addition, Mohammed et al (2008) constructed performance ratios for assessing the achievements of IBs in nine dimensions and ultimately covered three objectives including educating individuals, establishing justice and promoting welfare. Furthermore, Ngalim et al (2015) has developed an 'Islamic Vision for Development' based indicators for the assessment of the maqasid al-Shari'ah of IBs in light of the five Ghazalian maqasid with supplementary corollaries. In addition to maqasid al-Shari'ah performance measurement frameworks, some studies analysed the ethical identity of IBs through CSR-based disclosure analysis based on annual reports, such as Haniffa and Hudaib (2007) and Belal et al (2014).…”

Section: Ethical Social and Financial Performance Of Islamic Bankingmentioning

confidence: 99%

Higher Ethical Objective (Maqasid al-Shari’ah) Augmented Framework for Islamic Banks: Assessing Ethical Performance and Exploring Its Determinants

Mergaliyev

Asutay

Avdukić³

et al. 2019

J Bus Ethics

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This study utilises higher objectives postulated in Islamic moral economy or the maqasid al-Shari'ah theoretical framework's novel approach in evaluating the ethical, social, environmental and financial performance of Islamic banks. Maqasid al-Shari'ah is interpreted as achieving social good as a consequence in addition to well-being and, hence, it goes beyond traditional (voluntary) social responsibility. This study also explores the major determinants that affect maqasid performance as expressed through disclosure analysis. By expanding the traditional maqasid al-Shari'ah,, we develop a comprehensive evaluation framework in the form of a maqasid index, which is subjected to a rigorous disclosure analysis. Furthermore, in identifying the main determinants of the maqasid disclosure performance, panel data analysis is used by including several key variables alongside political and socioeconomic environment, ownership structures, and corporate and Shari'ah governance-related factors. The sample includes 33 full-fledged Islamic banks from 12 countries for the period of 2008-2016. The findings show that although during the nine-year period the disclosure of maqasid performance of the sampled Islamic banks has improved, this is still short of 'best practices'. Through panel data analysis, this study finds that the Muslim population indicator, CEO duality, Shari'ah governance, and leverage variables positively impact the disclosure of maqasid performance. However, the effect of GDP, financial development and human development index of the country, its political and civil rights, institutional ownership, and a higher share of independent directors have an overall negative impact on the maqasid performance. The findings reported in this study identify complex and multi-faceted relations between external market realities, corporate and Shari'ah governance mechanisms, and maqasid performance.

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Section: Ethical Social and Financial Performance Of Islamic Bankingmentioning

confidence: 99%

Higher Ethical Objective (Maqasid al-Shari’ah) Augmented Framework for Islamic Banks: Assessing Ethical Performance and Exploring Its Determinants

Mergaliyev

Asutay

Avdukić³

et al. 2019

J Bus Ethics

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“…Indonesian IBs showed superior maqasid performance compared with Jordanian banks. Ngalim and Ismail (2014) examined the annual reports of 20 IBs in Malaysia, Indonesia and the Gulf Cooperation Council countries, finding Indonesian banks had the highest level of social performance. Yet, the overall alignment of IBs with the IME's societal goals remains largely unfulfilled.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Assessing the impact of external determinants on the social performance of Islamic banks

Meskovic,

Avdukic,

Kozarevic

2023

IMEFM

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Purpose Explaining the sources of the differences in social performance among Islamic banks (IBs) is the motivation for this research. Consequently, the purpose of this paper is to investigate the relationship between the development of Islamic finance regulation, the development of an Islamic financial system, the proportions of affected Muslim populations and the level of competition, on the one hand, and the social performance of IBs, on the other. To the best of the authors' knowledge, this is the first study that investigates the impact of the development of regulation and the Islamic financial system on the social performance of IBs. Design/methodology/approach A balanced panel of annual data for 40 banks from 13 countries is applied, spanning 2012–2018. A social performance index with eight dimensions is constructed and measures the social performance of IBs. The index based on qualitative and quantitative data derives from IBs’ annual reports and financial statements. The linear scaling transformation method articulates the quantitative dimensions of the index. In hypotheses testing, the authors use OLS, LSDV, FEM and Random Effect Model to estimate Model (1) and panel-corrected standard errors with Prais–Winsten transformation to estimate Model (2). Findings This unique research confirms the positive impact of the development of Islamic finance regulation on the social performance of IBs. The results show that the development of Islamic finance regulation is consistently significant on all standard significance levels. IBs’ age and the presence of Muslim populations in the country are also significant in most estimators. Research limitations/implications The results of this research highlight a significant value for regulators, shareholders and the management of IBs. Without proper regulation, these banks can hardly operate under the principles and expectations of the Islamic moral economy. Originality/value This is pioneering research that explores the development of Islamic finance regulation and market concentration as a determinant of social performance of IBs. Development of Islamic finance regulation has proved significant in all estimated models, which confirms that a new variable has been discovered among determinants of the social performance of IBs.

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“…13 The development of an Islamic bank in itself is based on the ijtihad of scholars on how it should be operationalized and managed to represent the Shariah-based financial system. 14 The basic principle of Islamic banking should be applied strictly in which sharia clearly prohibits riba, including paying and obtaining any form of interest on financial transactions.…”

Section: Islamic Banking As An Alternative Solutionmentioning

confidence: 99%

The Impurity of Shariah Banking in Indonesia

Trisnaningtyas

2022

JSE

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The practice of Islamic banking should run accordingly with the rule of sharia. Islamic banking aimed to overcome conventional banking problems, which are often profit-driven and benefit only a particular party. In Indonesia, where the majority of the population is Muslims, Islamic banking runs together with conventional banking and creates a dual-banking system. This dual-banking system seems fair on the one hand. However, it causes challenges in terms of the pure practice of Islamic banking, on the other hand. This research analyses the implementation of Islamic banking in Indonesia within the dual-banking system through three main frameworks: the regulation of Islamic banking, Islamic banking’s product to compete with the conventional ones, and the government regulation regarding this matter. The research shows that Indonesia has not been able to implement Islamic banking in accordance with the sharia rules fully. Instead, some principles are adapted according to the dual-banking system and are aligned with the interest of various parties such as the government and central bank of Indonesia.

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A Comparative Analysis of the Maqasid Shariʾah of Islamic Banks in Malaysia, Indonesia and the Gulf Cooperation Council Countries

Cited by 5 publications

References 0 publications

Higher Ethical Objective (Maqasid al-Shari’ah) Augmented Framework for Islamic Banks: Assessing Ethical Performance and Exploring Its Determinants

Higher Ethical Objective (Maqasid al-Shari’ah) Augmented Framework for Islamic Banks: Assessing Ethical Performance and Exploring Its Determinants

Assessing the impact of external determinants on the social performance of Islamic banks

The Impurity of Shariah Banking in Indonesia

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