Abstract
This research is performed in order to empirically analyze and demonstrate trade principles and Islamic syariah (sharia) adherence-based banking performance by employing maqasid sharia index. This research is an explanatory research that aims to explain the causal relationship between variables using a quantitative approach. The study’s population is eight Islamic banks based on data used in this study. Study period lasted from 2010 to 2014. The analysis method used to answer hypothesis proposed in this study is PLS. The results of this study exhibits that trade principles possesses no significant effect on the performance of Islamic banking, trade principles possesses a significant effect on sharia adherence, and forementioned adherence has a significant effect on the sharia banking performance.
Highlights
This research is performed in order to empirically analyze and demonstrate trade principles and Islamic syariah adherence-based banking performance by employing maqasid sharia index
First hypothesis examines trade principle (X1) on sharia banking performance (Y1) which is exhibited as correlation coefficient of - 0152 with a (p) value of 0.295
It can be concluded that the increase or decrease in funding distribution based on trading principle possessed no significant effect on sharia banking performance, so the first hypothesis proposed in this study cannot be accepted or cannot be supported by empirical facts
Summary
This research is performed in order to empirically analyze and demonstrate trade principles and Islamic syariah (sharia) adherence-based banking performance by employing maqasid sharia index. The study’s population is eight Islamic banks based on data used in this study. Sharia economic and business development grows rapidly in recent years, especially in Indonesia. This phenomenon is exhibited through establishment of several sharia (Islamiclaw based) institutions, such as sharia banking, sharia insurance, sharia capital markets, sharia reksa dana (mutual funds), Baitul Mal wat Tamwil (Micro Financial Institution), sharia Union, sharia pawnshop etc. After Law No 7 1992 on Banking was amended by Law No 10 1998, which explicitly mentioned the establishment of the bank based on sharia principles and the possibility of conventional banks to establish sharia business units. Sharia banks developed as financial institution, which conducts its operations by adhering the basic principles in Islamic economics. Indonesia has large amount of Muslim population in the world, which makes it possessing great potential in gaining market share
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