DETERMINANTS OF MAQĀṢID AL-SHARĪ‘AH-BASED PERFORMANCE MEASUREMENT PRACTICES: THE CASE OF MALAYSIAN ISLAMIC BANKS
DOI:
https://doi.org/10.31436/ijema.v24i1.393Abstract
This study aims at investigating the practice of Maqāṣid al-Sharī‘ah based performance measures, determinants of its successful implementation and its impact on Islamic bank performance. Understanding the extent that Islamic banks are institutionalizing Maqāṣid al-Sharī‘ah based performance measures (Maqāṣid PMs) will provide greater insights into the development of Islamic banking in achieving the Islamic financial system objectives. A total of 146 questionnaires were distributed to all business units of all 16 Islamic commercial banks in Malaysia. The study found that contrary to the contemporary scepticism, Islamic banks in Malaysia are indeed promoting and committed to achieving Maqāṣid al-Sharī‘ah with the relevant performance measures in place. Specifically, the study found that performance measures for public interest and fairness are widely used by the Islamic banks. With communication technology and regulatory compliance, use of Maqāṣid al-Sharī‘ah based performance measures as Islamic banks’ performance driver becomes more potent.
References
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______. “Multiple Perspectives of Performance Measures.†European Management Journal 25, no. 4 (2007): 266-82.
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Fleming, D.M., C.W. Chan, and G. Chen. “Strategy, Performance-Measurement Systems, and Performance: A Study of Chinese Firms.†The International Journal of Accounting 44 (2009): 256-78.
Franceschini, F., M. Galetto, and E. Turina. “Techniques for Impact Evaluation of Performance Measurement Systems.†International Journal of Quality & Reliability Management 30, no. 2 (2013): 197-220.
Galbreath, J. “Does Primary Stakeholder Management Positively Affect the Bottom Line? Some Evidence from Australia.†Management Decision 44, no. 8 (2006): 1106-21.
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Grassa, R. “Shariah Supervisory System in Islamic Financial Institutions. New Issues and Challenges: A Comparative Analysis between Southeast Asia Models and GCC Models.†Humanomics 29, no. 4 (2013): 333-48.
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Hasan, Z. “In Search of the Perceptions of the Sharī‘ah Scholars on the Sharī‘ah Governance System.†International Journal of Islamic and Middle Eastern Finance and Management 7, no. 1 (2014): 22-36.
Henri, J.F. “Organizational Culture and Performance Measurement Systems.†Accounting, Organizations and Society 31, no. 1 (2006): 77-103.
Hillman, A.J., and G.D. Keim. “Shareholder Value, Stakeholder Management, and Social Issues: What’s the Bottom Line?†Strategic Management Journal 22 (2001): 125-39.
Hoque, Z. “A Contingency Theory Model of the Association Between Strategy, Environmental Uncertainty and Performance Measurement: Impact on Organization Performance.†International Business Review 13 (2004): 485-502.
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Kaplan, R.S., and D.P. Norton. “Using the Balance Scorecard as a Strategic Management System.†Business Harvard Review (Jan-Feb, 1996): 75-85.
Khan, M.S., and A. Mirakhor. “The Financial System and Monetary Policy in an Islamic Economy.†Journal of King Abdulaziz University: Islamic Economics 1 (1989): 39-57.
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Lahouel, B.B., J. Peretti, and D. Autissie. “Stakeholder Power and Corporate Social Performance: The Ownership Effect.†Corporate Governance 14, no. 3 (2014): 368-81.
Langfield-Smith, K. “Management Accounting Control Systems and Strategy: A Critical Review.†Accounting, Organizations and Society 2, no. 2 (1997): 207-32.
Lau, C.M., and E. Berry. “Nonfinancial Performance Measures: How Do They Affect Fairness of Performance Evaluation Procedures?†In Performance Measurement and Management Control: Innovative Concepts and Practices, edited by Marc J. Epstein, Jean-François Manzoni, and Antonio Davila, 285-307. Bingley, UK: Emerald Group Publishing Limited, 2010.
_____, and M. Sholihin. “Financial and Nonfinancial Performance Measures: How Do They Affect Job Satisfaction?†The British Accounting Review 37 (2005): 389-413.
Law of Malaysia, Islamic Financial Service Act, 2013.
Lewis, M.K. “Islam and Accounting.†Accounting Forum 25, no. 2 (2001): 104-27.
Lo, Y.H. “Stakeholder Management in the Chinese Hotel Industry: The Antecedents and Impacts.†International Journal of Contemporary Hospitality Management 25, no. 4 (2013): 470-90.
Markus, R.M. “Driving Force: Key to Strategy.†Strategy & Leadership 9, no. 6 (1981): 24–7.
Mia, L., and B. Clarke. “Market Competition, Management Accounting Systems and Business Unit Performance.†Management Accounting Research 10 (1999): 137-58.
Mohamad, M.H.S., F. Ali, and A. Mohd Amir. “Role of Organisational Culture on Performance Measurement Practice: The Case of Malaysian Manufacturing Firms.†Afro-Asian Journal Finance and Accounting 3, no. 4 (2013): 297-318.
Mohamed, E.K.A. “Multidimensional Performance Measurement in Islamic Banking.†Global Journal of Business Research 4, no. 3 (2010): 47-60.
Mohammad, O.M., and S. Shahwan. “The Objective of Islamic Economic and Islamic Banking in Light of Maqāṣid Al-Sharī‘ah: A Critical Review.†Middle-East Journal of Scientific Research 13 (2013): 75-84.
Mohammed, M.O., D. Abdul Razak, and F. Md. Taib “The Performance Measures of Islamic Banking Based on the Maqāṣid Framework.†Paper presented at the International Accounting Conferences IV, Putrajaya, 25 June 2008.
Mohd Amir, A. “The Indirect Effects of PMS Design on Malaysian Service Firms’ Characteristics and Performance.†Asian Review of Accounting 19, no. 1 (2011): 31-49.
______, N.N. Nik Ahmad, and M.H.S. Mohamad. “An Investigation on PMS Attributes in Service Organizations in Malaysia.†International Journal of Productivity and Performance Management 59, no. 8 (2010): 734-56.
Moneva, J.M., J.M. Rivera-Lirio, and M.J. Munoz-Torres. “The Corporate Stakeholder Commitment and Social and Financial Performance.†Industrial Management and Data Systems 107, no. 1 (2007): 84-102.
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Published
2016-06-30
How to Cite
Mohamad, M. H. S., Ali, M. A., & Mohd Sharif, R. A. (2016). DETERMINANTS OF MAQAÌ„SÌ£ID AL-SHARĪ‘AH-BASED PERFORMANCE MEASUREMENT PRACTICES: THE CASE OF MALAYSIAN ISLAMIC BANKS. International Journal of Economics, Management and Accounting, 24(1), 49–81. https://doi.org/10.31436/ijema.v24i1.393
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