Maqasid Sharia Index, Banking Risk and Performance Cases in Indonesian Islamic Banks

Abstract

In the operation, Islamic banking is assessed not only based on the banking risk management but also based on the maqasid sharia. The purpose of the study is to examine the influence of Maqasid Sharia and banking risk on Islamic bank performance. The performance of Islamic banks is measured by the return on assets (ROA), Maqasid Sharia proxied by Maqasid Sharia Index (MI), musharaka financing (MUS) and mudharaba financing (MUD), while banking risk is measured by Capital Adequacy Ratio (CAR), financing to deposit ratio (FDR), non-performing financing (NPF), and operating expense to operating income ratio (OEI). The population in this study is all of the Islamic commercial banks that operate in Indonesia, and there are as many as 13 of them. As the population is a little realistic, all of the population is taken as samples. The results show that the MI did not significantly affect the performance of Islamic banks, while MUS had a significant and positive impact on ROA and MUD had a significant but negative impact on ROA. NPF and OEI had a significant and negative effect on performance, but CAR and FDR had no significant effect on the performance of Islamic banks.