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Developing Islamic banking performance measures based on Maqasid al-shari’ah framework: cases of 24 selected banks'

Mustafa Omar, Mohammed and Md. Taib, Fauziah (2015) Developing Islamic banking performance measures based on Maqasid al-shari’ah framework: cases of 24 selected banks'. Journal of Islamic Monetary Economics and Finance (JIMF), 1 (1). pp. 55-77. ISSN 2460-6146 E-ISSN 2460-6618

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Islamic banking has achieved remarkable growth that has surpassed the growth of the conventional banking system. Yet, studies show that the performances of Islamic banks (IBs) seem to be trailing behind the conventional banks (CBs). Is the poor performance of IBs the result of mismatch between their objectives and their performance measurement criteria or it is a reflection of their true performances? The objectives of Islamic banking had not been formally addressed. Mustafa and Taib (2009) derived the objectives of Islamic banking from Abu Zahara’s theory of the objectives of Shari’ah (Maqasid al-Shari’ah) and, based on these Shari’ah objectives, developed a model of Islamic banking performance measures. They named it as Performance Measures based on Maqasid al-Shari’ah framework or the PMMS model. This paper has tested the PMMS model on a sample 24 banks (12 IBs and 12 CBs). The twenty four banks were also evaluated using the traditional conventional financial measures. Mann-Whitney U-Test results show IBs faring well in their performances when measured using the PMMS model than when they are measured using the conventional banking performance yardstick. Policy prescriptions and recommendations for further studies are provided at the concluding section of the paper.

Item Type: Article (Journal)
Additional Information: 1957/47267
Uncontrolled Keywords: Maqasid al-Shari’ah, Operationalization, PMMS Model, Simple Additive Weighting (SAW), Mann-Whitney U-Test.
Subjects: H Social Sciences > HA Statistics > HA29 Theory and method of social science statistics
H Social Sciences > HB Economic Theory > HB131 Methodology.Mathematical economics. Quantitative methods
H Social Sciences > HG Finance > HG1501 Banking
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User: Dr. Mustafa Omar Mohammed Banki
Date Deposited: 09 Mar 2016 17:55
Last Modified: 16 Oct 2018 11:36
URI: http://irep.iium.edu.my/id/eprint/47267

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