The Objectives And Performance Measures Of Islamic Banking Based On Maqasid Al-Shari‟Ah Framework
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Date
2011
Authors
Mohammed, Mustafa Omar
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Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
While the Islamic banking (IB) industry has achieved a remarkable growth, studies have shown that the performance of Islamic banks is trailing behind their conventional counterpart. Besides, there are contentions that IB is converging towards the conventional banking (CB) system. This does bring into fore a pertinent research question whether the poor performance of Islamic banks is due to the mismatch between their objectives and performance criteria or it is really a true reflection of their performance. So far, the vast majority of research has remained silent on this important research question. There has never been any formal study on the objectives of Islamic banking, nor has there been any effort to explore the possibility of mismatch between the objectives of Islamic banks and the conventional banking performance measures used to measure their results. This study has gone against these trends. It has tried to fill in the research gap by identifying the objectives of Islamic banking from the theory of Maqasid al-Shari‟ah and then used these objectives as bases for developing the Islamic Banking Performance Measures based on Maqasid al-Shari‟ah or the PMMS model. The model, along with Conventional Banking Performance Measures or the CBPM model, were tested on a sample of 24 banks (12 IB and 12 CB) using the Mann-Whitney U-Test non parametric statistical method. The results of the tests show Islamic banks performing remarkably good when measured using the PMMS model compared to when they are measured using the CBPM model.
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Keywords
Islamic Banking , Maqasid Al-Shari‟Ah Framework