Calculation of financial intermediation services indirectly measured (FISIM) for Islamic banking activity in Malaysia

Abstract

The Financial intermediation services indirectly measured (FISIM) is a concept used in national accounts to value the activity of banks as intermediaries between depositors and borrowers and widely used in conventional banking. Unlike conventional banking, Islamic banking declared their loans as financing in financial position statement. While interest expense and interest received declared as 'profit distributed to depositors' and 'income derived from investment'. The terms were compliant by the shariah law in Malaysia and this paper show on how the calculation of FISIM for Islamic banking in the context of the 2008 System of National Accounts. The calculation process is similar to conventional banks methodology, but the difference was only terms of financing instead of loans that have been used in Islamic Banking.