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Toward the development of an Islamic banking sustainability performance index

Rym Ammar (Tunis Business School, University of Tunis, El Mourouj, Tunisia)
Sonia Rebai (Tunis Business School, University of Tunis, El Mourouj, Tunisia)
Dhafer Saidane (SKEMA Business School, Université Côte d’Azur, Euralille, France)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 22 December 2022

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Abstract

Purpose

The purpose of this paper is to suggest a model that yields a sustainability performance index for Islamic banks (IBs). This index is expected to account for stakeholders’ viewpoints while considering sustainability and Maqasid Al-Shariah as bases.

Design/methodology/approach

First, based on the relevant literature review refined through consultations with academic, banking and Shariah experts, the main stakeholders and their corresponding lists of relevant attributes and sub-attributes are identified. Then, adopting a multi-attribute utility approach and based on a second step of interviews with experts, an aggregated index is suggested. Finally, the developed index is applied to five famous Islamic banking groups over the period 2005–2019.

Findings

Empirical evidence shows that the banks used in the implementation do not achieve high scores of the suggested index. This can be interpreted through a lack of Islamic normative aspects and low adherence to sustainability practices. Specifically, they are not functioning on a justice basis and are deficient in providing sufficient varieties of Islamic products. They are also more interested in economic sustainability and are not involved in environmental and social ones.

Originality/value

The developed index not only considers the compliance of the banking activities with Shariah, but it also addresses their sustainability from the main stakeholders’ perspectives. The suggested model provides a transparent performance evaluation tool for IBs omitting all causes of conflict of interests and certifies the fairness of the resulting assessments.

Keywords

Citation

Ammar, R., Rebai, S. and Saidane, D. (2022), "Toward the development of an Islamic banking sustainability performance index", International Journal of Islamic and Middle Eastern Finance and Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IMEFM-12-2021-0479

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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