The Development of Maqasid Shariah-based Performance Measurement of Islamic Banks: A Review

Abstract

This paper reviews and revisits the existing studies on the development and application of Maqasid Shari’ah-based in measuring Islamic banks’ performance. At present there is very limited rigorous research on the application of Maqasid Shari’ah and the performance of Islamic banks. Despite this situation, past empirical papers relating to the application of Maqasid Shari’ah in measuring the performance of Islamic banks were selected for review and analysis. The literature review shows that the past study on the development of the Maqasid Shari’ah-based in measuring the performance of Islamic banks primarily refers to the pioneering work of Mohammed et al. (2008) and the development of the Maqasid Shari’ah-based index mostly focus on the component of necessities of the Maslahah. There is a dearth of study that provides empirical evidence on the Islamic banks’ performance using the Maqasid Shari’ah-based index and meas-urement. This paper addresses the pattern and literature gaps on the past study on the Maqasid Shari’ah-based performance measurement that would serve the interest of the academic researchers, practitioners, regulators, and policymakers in reviewing Islamic banks’ performance in attaining the objectives of Shari'ah.