PERFORMANCE ANALYSIS OF SHARIA AND CONVENTIONAL BANKS WITH MAQASHID SHARIA: CASE STUDY OF INDONESIA AND MALAYSIA IN 2016-2020

Abstract

This study examines the 2016-2020 performance of Islamic and conventional banks in Indonesia and Malaysia that were chosen using the Maqashid Sharia methodology. The data analysis technique employed the simple additive weighting method (SAW) in the weighing process, as well as an aggregation and sampling technique with purposive sampling and data sources from each bank’s annual report. Imam Abu Zahrah’s Maqashid Sharia approach as a measuring tool and by adding the Salah variable as a new-Sharia goal, in addition to Tahdzib al-Fard, Iqamah al-’All, and Jalb al-Maslahah are novel aspects of this research. The Maqashid Sharia approach is a novel method for measuring performance. Financial ratio approaches, such as return on asset (ROA), return on equity (ROE), etc., have dominated banks’ performance measurement methods. The study reveals the following Maqashid Syariah Index (IMS) rankings for Islamic and conventional banks in Indonesia and Malaysia: With a score of 0.281348, Bank Muamalat Malaysia Berhad occupies the first place. Bank Islam Malaysia Berhad was in second place with a score of 0.249451. Bank Negara Indonesia Syariah ranks third with a score of 0.213718. Hong Leong Bank Berhad ranked it fourth with a score of 0.192773. Maybank Islamic Berhad was ranked fifth with a score of 0.191428. RHB Bank Berhad was ranked sixth with a score of 0.190791. The Sharia National Pension Savings ranked seventh with a score of 0.165967. With a score of 0.156738, Bank Syariah Mandiri occupies the eighth position. The ninth position is held by Affin Islamic Bank Berhad, followed by Bank Rakyat Indonesia in tenth place with a score of 0.055160.