Abstract
This study sought to test and find empirical evidence on the effect of Al-Bai’ and wadiah contracts on sharia compliance and the performance of sharia banking system through the Maqashid sharia index. The study employed the explanatory research design, aimed at explaining a causal relationship among variables using a quantitative approach. The Partial Least Square (PLS) model was used as the analysis method to answer the hypotheses of this study. The authors found out that increases and decreases in wadiah contracts did not influence the financial performance of sharia banks. Another finding also showed that Al-Bai’ and wadiah contracts and sharia compliance had a significant effect on the performance of public sharia banks. This result evidenced that the concept of an Islamic bank should be a mediator, which should neither allow profiting from the fund, nor should be used to invest in the real sector of various funding systems.
Highlights
Sharia fund banks are unique entities with characteristics that differentiate them from conventional financial institutions
Caution is a crucial key to keep in mind related to the strict application of the sharia compliance aspect as an attempt to prevent cheatings or intentional ignorance done to deceive, cheat, or manipulate banks, clients, or other parties involved in the banking system
The study suggests that the sharia banking system in Indonesia should always consider the aspect of motive in giving out their financial programs to determine the amount of the mark up in the Al-Bai’ contract that should be in line with the sharia principles
Summary
Sharia fund banks are unique entities with characteristics that differentiate them from conventional financial institutions. God’s will for the humans to live their life in this ing system in Indonesia and their relations with world and in after life prosperously by maintain- the sharia compliance and performance of the ing five aspects, which are the religion, spirit, logic, sharia banks. Arifin (2009) stated that the meaning of sharia occurred and at investigating the causal relationcompliance in the context of sharia banking is ship of some events with certain objects within a the “implementation” of Islamic principles, shar- certain time period (Umar, 2005) This descripia and its traditions within the financial transac- tive study is aimed at investigating and finding tions, banking and other business. The ria’s functions as the objective of the system should implementation of the maqashid sharia concept be oriented to improve the prosperity of the peowithin the performance of sharia banks is consid- ple. Attempts to make maqashid sharia sharia business to solve various problems to keep the measurement to evaluate the performance of the economic stability on the right track based on sharia banks were conducted by Antonio et al the sharia compliance and maqashid sharia
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
