Developing and validating the components of Maqasid al-Shari’ah -based performance measurement model for Islamic banks
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 15 January 2021
Issue publication date: 6 April 2021
Abstract
Purpose
The purpose of this paper is to develop and subsequently validate a Maqasid al-Shari’ah-based performance evaluation model for Islamic banks.
Design/methodology/approach
Initially, a comprehensive review of the existing and relevant literature is carried out and a prototype evaluation model has been developed. This has been augmented and refined through in-depth interviews of Shari’ah scholars and banking experts. Afterwards, the modified model has been validated by taking inputs from academics and Islamic banking practitioners through a focus group discussion.
Findings
The major outcome of the present work is a Maqasid al-Shari’ah-based performance evaluation model for Islamic banks. At the inception of the work, the Maqasid frameworks of Imam al-Ghazali and Abu Zahrah were combined. The combined model incorporates various dimensions, elements and the corresponding measures of three components, namely, justice, education and maslahah.
Research limitations/implications
Not being able to test the model statistically or empirically can be considered as a limitation.
Practical implications
The comprehensive theoretical framework of the developed model addresses all aspects of human well-being. Thus, if implemented the model will ensure welfare for all the stakeholders. It will also encourage the regulators to introduce new reporting standards which will be more reflective of Maqasid al-Shari’ah.
Social implications
Fulfilling Maqasid will create a positive brand image for Islamic banks, which will attract more customers both Muslims and non-Muslims. Thus, this will create a wider scope for earning more revenues.
Originality/value
There has been concern that Islamic banks are converging towards conventional banking systems and the same performance measure instrument is being used to evaluate the performance of both Islamic and conventional banks. The present work has developed a Maqasid al-Shari’ah-based performance evaluation model for Islamic banks.
Keywords
Acknowledgements
The authors are grateful to the Ministry of Education, Malaysia for the fundamental research grant, No. FRGS15-227–0468. The authors are also thankful to all the interviewees and participants in Focus Group Discussion, without their active participation the research would not have been completed.
Citation
Tarique, K.M., Islam, R. and Mohammed, M.O. (2021), "Developing and validating the components of
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited