Maqasid Shariah Performance Index Conceptualisation: Examples from Malaysia and Indonesia

Abstract

Maqasid Shariah (MS) is a tool for analyzing the acceptability of Islamic structural reforms and their alignment with Islamic law's principles, aims, and objectives. Measurement of Islamic banks' performance can use MS index to find out to what extent where is the level of achievement of sharia values carried out in shariah banking. The purpose of this article is to investigate the legislative framework and the use of the MS index as performance index for Islamic financial institutions in Malaysia and Indonesia. Indonesia and Malaysia are two Muslim countries in Southeast Asia and have many similarities. Indonesian Islamic banking, carrying out its operational activities following the objectives of shariah, seems to be more prevalent in Iqamah Al Adl. In Malaysia, based on the MS concept shows the lack of application of shariah principles, especially in the case of Tahdzib AlFard, so that the existence of shariah banking in Malaysia still cannot be felt optimally to provide benefits in terms of education for employees and the surrounding community. Malaysia follows an instructional model in which the Shariah board serves as an advising body, but Indonesia follows a monitoring model in which the Shariah board serves as the supervisory body.