Maqashid Sharia Index and Its Impact on Profitability of Islamic Banks
Tiffani Khairani(a), Sahara(a), Tita Nursyamsiah(a)
(a) Faculty of Economics and Management, Institut Pertanian Bogor, Dramaga, Bogor 16680, Indonesia
Abstract
Islamic banking in Indonesia continues to grow rapidly. This development can be seen from an institutional and financial perspective. Islamic banks as a business entity that operates on the basis of Islamic values and ethical systems, are not only required to obtain profits, but also are obliged to pay attention to their functions and objectives based on the maqashid sharia concept. This study aims to analyze the performance of Islamic banks in Indonesia based on the maqashid sharia index and analyze the influence of maqashid sharia index and financial performance on the profitability of Islamic banks. This research was conducted at eight Islamic banks selected by purposive sampling technique. The analytical tool used in this study are maqashid syariah index, comparative performance index, and panel data regression analysis. Based on the results of the calculation of maqashid sharia index, it is known that the three Islamic banks that have highest maqashid shariah index are Bank Victoria Syariah, Bank Muamalat Indonesia, and BCA Syariah. While based on the results of panel data regression, it is known that the establishing justice performance index (IK2), NPF, and FDR have significant and negative effect on the ROA of Islamic banks.
Keywords: Islamic bank; maqashid sharia index; financial performance; profitability
Topic: International Conference of Islamic Economic and Financial Inclusion