THE DISCLOSURE PRACTICES ON MAQASID SHARIAH OBJECTIVES AMONG MALAYSIAN ISLAMIC BANKS USING FUZZY TOPSIS ASSESSMENT

Abstract

Background and Purpose: Maqasid Shariah ratio is operationalized based on Maqasid Shariah objectives. Shariah fraternity, such as scholars, investors, and customers, is still assessing how the business, specifically the financial institutions, delivers Maqasid Shariah's objectives according to their business goals. Thus, this becomes a genuine concern for society, especially the users of the financial information and shariah financing or investing customers, depositors, or borrowers. Therefore, this study intends to examine the application level of Maqasid Shariah objectives by Islamic banks using their financial reporting data.   Methodology: The Maqasid Shariah ratio is measured based on the two objectives of Maqasid Shariah, namely Justice (Al-Adl) and Welfare (Al-Maslahah). The determinants of the Maqasid Shariah ratio as a performance score for the Shariah scale of Islamic banks are assessed using the sophisticated Fuzzy TOPSIS technique.   Findings: Surprisingly, Malaysian Islamic banks' achievement is based on the Shariah objectives, specifically on Justice (Al-Adl) at 84.51% and Welfare (Al-Maslahah) at 67.53%. However, the top score for Malaysian Islamic banks could achieve an above-average level of 44.1% out of 70% on the overall average score on Maqasid Shariah's objectives application in their reporting practice.   Contributions: The results help improve and understand the application levels on Maqasid Shariah objectives and the disclosure practice on Maqasid Shariah's financial reporting for Islamic banks in Malaysia. Hence, Islamic banks need full disclosure and specific standard or provision on reporting the Maqasid Shariah elements. This needs to assist the users and provide insights into making the right decision, especially in Shariah-compliant investment products, financing alternatives, or services.   Keywords: Maqasid Shariah, Islamic banks, disclosure, maslahah, fuzzy TOPSIS.   Cite as: Abdul Rahman, R., Kee, D. K. H. A., Bujang, I., & Jidwin, A. P. (2023). The disclosure practices on Maqasid Shariah objectives among Malaysian Islamic banks using fuzzy Topsis assessment. Journal of Nusantara Studies, 8(TI), 109-133. http://dx.doi.org/10.24200/jonus.vol8issTIpp109-133