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Developing and validating the components of Maqasid al-Shari’ah-based performance measurement model for Islamic banks

Kazi Md Tarique (University of Liberal Arts Bangladesh, Dhaka, Bangladesh)
Rafikul Islam (Department of Business Administration, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Mustafa Omar Mohammed (Department of Economics, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

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

569

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 Maqasid al-Shari’ah-based performance measurement model for Islamic banks", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 14 No. 2, pp. 366-390. https://doi.org/10.1108/IMEFM-12-2018-0432

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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