Performance of Indonesian Islamic Banks Based on Maqasid Shariah Index: Stakeholder Theory Perspective

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1. International Journal of Business , Accounting and Management ISSN : 2527-3531 | Volume 4, Issue 1, 2019 www.doarj.org PERFORMANCE OF INDONESIAN ISLAMIC BANKS BASED ON MAQASID SHARIAH INDEX: STAKEHOLDER THEORY PERSPECTIVE Mega Silvia, Isni Andriana, Taufiq Marwa Faculty of Economics, Sriwijaya University, Indonesia Email: Megasilviaa19@gmail.com Isni Andriana Faculty of Economics, Sriwijaya University, Indonesia Email: Isniandriana@fe.unsri.ac.id Taufiq Marwa Faculty of Economics, Sriwijaya University, Indonesia Email: Taufiqmarwa@unsri.ac.id Abstract: The increase in financial performance on Islamic banks is expected to be directly proportional to the performance based on the Islamic concept. Through adequate sharia-based performance, Islamic banks can prove to stakeholders that the business system implemented is relevant to Islamic concepts, values and ethics. This study is intended to evaluate the success of Indonesian Islamic banks in achieving performance based on Maqasid Shariah Index. The observation period in this study is 5 years, from 2013 to 2017. The data used is secondary data obtained through financial statements. Data analysis was performed using the simple additive weight (SAW) method. The results showed that in 2013 Indonesian Islamic banks reached maqasid shariah index value of 0.2256, in 2014 amounted to 0.2466, in 2015 amounted to 0.2459, in 2016 amounted to 0.2793, and in 2017 amounted to 0.2807. Overall, BPS ranked first with a score of 0.3327, BRIS ranked second with a value of 0.3223, BVS ranked third with a value of 0.3065, BCAS ranked fourth with a value of 0.2828, BSB ranked fifth with a value of 0.2735, MSI ranked sixth with a value of 0.2358, BSM ranked seventh with a value of 0.2271, BNIS ranked eighth with a value of 0.2206, BMS ranked ninth with a value of 0.1789, and BMI ranked tenth with a value of 0.1741. Keywords: Maqasid Shariah Index, Islamic Bank Performance, Stakeholder Theory 1. Introduction Islamic banking is a financial institution that arises because of the wishes of Muslim communities. Muslim communities need financial institutions that are guided by Islamic teachings (Napier, 2009). The emergence of Islamic banking is also expected that the community can provide justice and help the country's economy (Sehrish et al., 2012). Values, ethics, and Islamic principles that exist in Islamic banking are able to add to their uniqueness and superiority. Sunarsih & Firmansyah (2018) explained that Islamic banking is not only profit oriented, but also on social aspects which include the management of zakat funds, infaq, sodaqoh, grants and benevolent funds, and the prohibition of activities related to riba, gharar, maysir and others. The uniqueness and excellence is one way for Islamic banking to continue to grow. Up to 2017 global Islamic banking assets reached USD 1,557.5 billion or 76% of the total Islamic financial assets of USD 2,050.2 billion (Islamic Financial Services Board, 2018). The achievement of Islamic banking is closely related to the contribution of assets from several countries and including Indonesia. Indonesia has 13 Islamic commercial banks and 21 Islamic business units with an average total assets of Rp.132,528 billion and profits reaching Rp.3,997 1 www.doarj.org
2. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective billion in 2018 (Otoritas Jasa Keuangan, 2018). Indonesian Islamic banks also occupy the top 10 positions in Islamic bank assets globally with asset contributions of 1.8% (Islamic Financial Services Board, 2018). Indonesia as a country with the largest Muslim population in the world is expected to contribute more to Islamic bank assets globally. In fact, other countries such as Malaysia, Saudi Arabia, United Arab Emirates, Iran, Qatar, Turkey, Kuwait, and Bangladesh are able to surpass Indonesia in contributing to Islamic bank assets globally. The low contribution of assets of Indonesian Islamic banks globally compared to other countries, because of the low level of public confidence in compliance with Islamic banks in carrying out their operational activities and low public awareness to avoid usury (Amaroh & Masturin, 2018). It is important for Indonesian Islamic banks to foster confidence and attract stakeholder sympathy through achieving adequate performance. Performance is the highest achievement originating from all activities and transactions carried out by the entity (Selvam et al.,2016). Performance in the Islamic banking sector is not limited to achieving profitability, but is also related to achieving sharia objectives (Mohammed, Tarique & Islam, 2015) (Rahman et al., 2017). There are several measuring instruments that are appropriate for assessing performance achievement in Islamic banks, one of which uses the maqasid shariah index method. Maqasid shariah is a performance concept of sharia entities based on sharia characteristics and objectives, making it more complex and different from conventional entities (Mohamad, Ali & Sharif, 2016). Alam, Hassan & Said (2015) explained that maqasid shariah is synonymous with achieving objectives in economic and social aspects that lead to benefits, elimination of suffering and increased welfare values. Through the measurement of maqasid shariah performance can be seen the highest achievement of management in running its business based on the characteristics and objectives of sharia. Mohammed, Razak & Taib (2008) explain that maqasid shariah is classified into 3 objectives of sharia, namely educating individuals (tahdhib al-fard), upholding justice (iqamah al-adl), and improving welfare (jaib almaslahah). An adequate Maqasid shariah index is proof of Islamic banks being able to apply the sharia concept and fulfill stakeholder expectations. The performance evaluation of Islamic banks through the maqasid shariah index approach can help communities and other stakeholders to control the activities of Islamic banks, make investment decisions and make decisions on using Islamic banking services. However, studies that analyze the performance of Islamic banks with the maqasid shariah index approach especially in Indonesian Islamic banks are still relatively small. The latest research by Hartono & Sobari in 2017 was carried out on a small sample with data in 2015 alone, so that we cannot know the extent to which the increase or decrease that occurred in the achievement of maqasid shariah performance each year. Based on this, this study will analyze the performance of Indonesian Islamic banks with the maqasid shariah index approach for 5 years to get results regarding the increase or decrease that occurred in 2013 to 2017. 2. 2.1 Literature Review Stakeholder Theory Donaldson & Preston (1995) explain the normative aspects, stakeholder theory that is used to regulate entity functions based on moral guidelines, how managers must perform and see the objectives of the entity based on ethical principles that underlie the formation of these entities. As an entity that is not only for personal gain, it is important for Islamic banks in Indonesia to achieve the objectives of sharia (maqasid shariah). Through the maqasid sharia performance award, Indonesian Islamic banks can fulfill the expectations of their stakeholders to become entities that benefit all parties and contribute to the progress of the nation. Referring to the stakeholder theory, it indicates that Islamic banks in Indonesia as entities based on sharia values and in a community that is predominantly Muslim will try to achieve objectives that are relevant to the characteristics of sharia. Thus, the hypothesis in this study is the performance of Islamic banks in Indonesia based on maqashid sharia index has been adequate and relevant to the objectives of sharia. 2.2 Performance of Maqasid Shariah Abu Zaharah in 1997 classified maqasid shariah into several sharia objectives in the form of the objectives of tahdhib al-fard (educating individuals), iqamah al-adl (upholding justice), and jaib al maslahah (increasing welfare). All of these objectives were developed by Mohammed, Razak & Taib (2008) using the SAW (Simple Additive Weighting) method to become the maqasid shariah index, each of which has several dimensions and elements as follows: 1. Objectives of Tahdhib Al-fard (Educating Individuals) This objective relates to how Islamic banks should be able to develop knowledge, abilities and instill spiritual values in each individual. In this case Islamic banks can contribute in the fields of knowledge, skills and moral values through the design of training and education programs for all human resources so that they can achieve 2 www.doarj.org
3. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective good work productivity and be able to disclose various information about their products to their stakeholders. In addition, Islamic banks can also provide education and training assistance to people in need. 2. Objectives of Iqamah Al-adl (Upholding Justice) This objective concerns the policies of sharia entities in utilizing profits and managing business in a direction that is able to minimize the gap in wealth and income. Islamic banks must be able to convince stakeholders that all activities and transactions involving products, provisions, prices, and cooperation agreements have been carried out fairly. Sharia entities must convince stakeholders that business activities that take place are free from injustices and negative elements in the form of usury, corruption and fraud that can harm all parties. In addition, Islamic banks can also realize economic and social justice through profit-sharing activities. 3. Objectives of Jaib Al-maslahah (Increasing Welfare) This objective relates to the priority of Islamic banks to provide benefits to the community in every business and non-business activity carried out. Islamic banks are expected to be able to carry out activities that can meet the basic needs of all people through housing project financing, investments in the real sector, zakat payments and others. 3. Research Methods 3.1 Scope of Research The focus of this study is to evaluate the performance based on the Maqasid Shariah index of Islamic banks in Indonesia through financial statements for 5 years of observation to ensure an increase or decrease that occurs in the Maqasid Shariah Index. 3.2 Types and Data Sources The data used in this study is secondary data taken through financial statements for the period 2013-2017 at Islamic commercial banks in Indonesia which are listed on the official website of Bank Indonesia. 3.3 Population and Samples The population of this study is all Islamic commercial banks in Indonesia, which number 13 banks. The research sample was determined using purposive sampling technique, so the samples in this study were as follows: Table 1 Research sample No Banks 1 PT. Bank Muamalat Indonesia (BMI) 2 PT. Maybank Syariah Indonesia (MSI) 3 PT. Bank Central Asia Syariah (BCAS) 4 PT. Bank Mega Syariah (BMS) 5 PT. Bank Rakyat Indonesia Syariah (BRIS) 6 PT. Bank Panin Syariah (BPS) 7 PT. Bank Syariah Bukopin (BSB) 8 PT. Bank Negara Indonesia Syariah (BNIS) 9 PT. Bank Syariah Mandiri (BSM) 10 PT.Bank Victoria Syariah (BVS) Source: Bank Indonesia (2019) 3.4 Data Analysis Techniques This type of research is quantitative, and data analysis techniques use the SAW (Simple Additive Weighting) method. The method is intended to determine the performance achievement of maqasid shariah by summing each ratio with the weight of the value determined by the world shariah expert. Maqasid shariah index consists of several objectives, dimensions, elements and ratios as follows: Table 2 Maqasid Shariah Index No Objectives Dimension Element Ratio 1 Educate D1. Progress of knowledge E1. Education grant R1. Education grants / individuals total costs (tahdhib alE2. Research R2. Research costs / total fard) costs D2. Increased expertise E3. Training R3. Training costs / total costs D3. Increased awareness E4. Publication or R4. Publication or 3 www.doarj.org
4. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective 2 3 Uphold justice (iqamah adl) al- Increasing Welfare (jaib al-maslahah) of Islamic banks promotion D4. Fair return E5. Fair return D5. Affordable services & products E6. function D6. Removal of negative elements (injustice) D7. Bank profitability E7. Products without interest E8. Profit ratio Distribution promotion costs / total costs R5. Net income / total income R6. Mudharabah & musyarakah / total financing R7. Interest-free income / total income R8. Net income / total assets R9. Zakat paid / net income R10. Total real sector / total financing financing D8. Distribution of income E9. Income transfer and welfare D9. Investment in the real E10. Real sector sector investment ratio Source: Mohammed, Razak & Taib (2008) To obtain the best results from the measurement of all these ratios, the model will be verified and weighted for each objective and element. The following are the average weights to be given: Table 3 Average Weight of Maqasid Shariah No Variable Variable Weight Element Element Weight 1 Educate individuals 0,30 E1. Education grant 0,24 (tahdhib al-fard) E2. Research 0,27 E3. Training 0,26 E4. Publication 0,23 Total 1 2 Uphold justice (iqamah 0,41 E1. Fair return 0,30 al-adl) E2. Distribution 0,32 function E3. Products without 0,38 interest Total 1 3 Increasing Welfare 0,29 E1. Profit ratio 0,33 (jaib al-maslahah) E2. Income transfer 0,30 E3. Real sector 0,37 investment ratio Total 1 Source: Mohammed, Razak & Taib (2008) Following are the steps to find out the performance achievement of maqasid shariah: 1. Calculate each element using the ratio of ratios in table 3 2. Calculate the performance value for each sharia objectives using the SAW (simple additive weighting) method. The SAW method is to multiply the calculation of the ratio of the elements to the weights in table 4. Here are the formulas: T.1 = (W11 x E11 x R11 ) + (W11 x E12 x R21 ) + (W11 x E13 x R31 ) + (W11 x E14 x R41 ) T.2 = (W22 x E21 x R12 ) + (W22 x E22 x R22 ) + (W22 x E23 x R32 ) T.3 = (W33 x E31 x R13 ) + (W33 x E32 x R23 ) + (W33 x E33 x R33 ) T.1 is performance index for the first objectives. T.2 is performance index for the second objectives. T.3 is performance index for the third objectives. W11 - W33 is weight for the first objectives to the third objectives. E11 - E14 is weight of the first element to the fourth element for the first objectives. R11 - R41 is rating the ratio of the first element to the fourth element for the first objectives. E21 - E23 is the weight of the first element to the third element for the second objectives. R12 - R32 is valuation of the ratio of the first element to the third element for the second objectives. 4 www.doarj.org
5. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective E31 - E33 is weight of the first element to the third element for the third objectives. R13 - R33 is valuation of the ratio of the first element to the third element for the third objectives. 3. Add all the indices for the 1st, 2nd and 3rd objectives to get the combined value of the maqasid shariah Index. MSI (Maqasid Shariah Index) = T.1 + T.2 + T.3. 4. Results And Discussion 4.1 Results Table 4 The Achievement of Tahdhib Al-Fard Bank 2013 2014 2015 2016 2017 T.1 R T.1 R T.1 R T.1 R T.1 R BMI 0,0043 3 0,0030 7 0,0043 3 0,0018 6 0,0011 9 MSI 0,0038 5 0,0041 3 0,0005 9 0,0011 9 0,0015 7 BCAS 0,0030 7 0,0034 6 0,0033 4 0,0026 4 0,0031 5 BMS 0,0004 10 0,0006 10 0,0004 10 0,0006 10 0,0009 10 BRIS 0,0035 6 0,0029 8 0,0024 7 0,0014 7 0,0012 8 BPS 0,0141 1 0,0083 1 0,0066 1 0,0058 2 0,0138 1 BSB 0,0012 9 0,0039 4 0,0032 5 0,0036 3 0,0038 4 BNIS 0,0064 2 0,0060 2 0,0063 2 0,0059 1 0,0063 2 BSM 0,0023 8 0,0015 9 0,0018 8 0,0012 8 0,0016 6 BVS 0,0042 4 0,0038 5 0,0030 6 0,0025 5 0,0041 3 Total 0,0432 0,0375 0,0318 0,0265 0,0374 Average 0,0043 0,0037 0,0031 0,0026 0,0037 Source: Author (2019) The achievement of the tahdhib al-fard in Indonesian Islamic banks which is the sample of the study is still very low and out of expectation. This is due to the small ratio of costs allocated to the interests of education, training, research and development. The allocation of costs incurred is not up to 1% of the total cost, only BPS in 2013 and 2017 allocates costs above 1% for the benefit of the tahdhib al-fard. Overall, the average annual rate of Islamic banks in Indonesia is still below 1%. This situation indicates that the contribution in empowering and improving the quality of human resources is very low. BPS and BNIS are Islamic banks with the best achievement of tahdhib al-fard compared to other Islamic banks because BPS and BNIS always take first and second positions alternately, then BMS always occupies the lowest position from 2013 to 2017. Table 5 The Achievement of Iqamah Al-Adl Bank 2013 2014 2015 2016 2017 T.2 R T.2 R T.2 R T.2 R T.2 R BMI 0,1120 10 0,0972 10 0,0859 10 0,1238 10 0,1320 10 MSI 0,2083 3 0,2058 5 0,1951 6 0,2269 6 0,2259 6 BCAS 0,2323 1 0,2235 2 0,2221 4 0,2276 5 0,2312 5 BMS 0,1674 8 0,1582 9 0,1586 9 0,1768 9 0,1848 9 BRIS 0,2009 5 0,1969 6 0,2094 5 0,2945 1 0,2881 1 BPS 0,2121 2 0,2174 3 0,2245 2 0,2689 3 0,2707 2 BSB 0,2045 4 0,2084 4 0,2238 3 0,2293 4 0,2332 4 BNIS 0,1861 7 0,1863 7 0,1915 8 0,1937 8 0,1966 8 BSM 0,1951 6 0,1840 8 0,1929 7 0,1983 7 0,2049 7 BVS 0,1575 9 0,2422 1 0,2619 1 0,2727 2 0,2545 3 Total 1,8762 1,9199 1,9657 2,2125 2,2219 Average 0,1876 0,1919 0,1965 0,2212 0,2221 Source: Author (2019) Islamic banks with high objective values of iqamah al-adl indicate that Islamic banks can contribute maximally to uphold justice and avoid negative effects in all activities carried out. However, the analysis shows that the achievement of the iqamah al-adl Islamic banks in Indonesia is relatively low. This is due to the small ratio of mudharabah, musyarakah financing and fair return of Islamic banks in Indonesia. This situation indicates that mudharabah, musyarakah, and profit sharing systems have not dominated business activities that have taken place, 5 www.doarj.org
6. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective so that the function of sharia financial institutions that are identical to the profit sharing system has not been maximized by Islamic banks in Indonesia. The average achievement of the iqamah al-adl in Indonesian Islamic bank for 2013-2017 is still below 25%, the highest achievement in 2017 is 22.21% and the lowest in 2013 is 18.76%. Only BRIS in 2016 and 2017, BPS in 2016 and 2017, and BVS in 2015, 2016, and 2017 which achieved iqamah aladl values above 25%. Although the value of iqamah al-adl in Indonesian Islamic banks is categorized as low, it has increased from 2013 to 2017. Table 6 The Achievement of Jaib Al-maslahah Bank 2013 2014 2015 2016 2017 T.3 R T.3 R T.3 R T.3 R T.3 R BMI 0,0616 1 0,0607 3 0,0630 3 0,0599 4 0,0598 5 MSI 0,0217 8 0,0196 9 0,0218 9 0,0299 8 0,0128 10 BCAS 0,0565 2 0,0511 5 0,0491 5 0,0517 6 0,0535 6 BMS 0,0051 10 0,0040 10 0,0047 10 0,0125 10 0,0192 9 BRIS 0,0350 5 0,1257 1 0,0430 6 0,1080 1 0,1005 1 BPS 0,0376 3 0,0982 2 0,1026 1 0,0945 2 0,0921 2 BSB 0,0361 4 0,0424 6 0,0520 4 0,0568 5 0,0651 4 BNIS 0,0211 9 0,0206 8 0,0233 8 0,0248 9 0,0280 8 BSM 0,0273 7 0,0262 7 0,0292 7 0,0318 7 0,0380 7 BVS 0,0346 6 0,0596 4 0,0723 2 0,0832 3 0,0783 3 Total 0,3366 0,5081 0,4610 0,5531 0,5473 Average 0,0336 0,0508 0,0461 0,0553 0,0547 Source: Author (2019) The results of the analysis show that the contribution in the aspects of maslahah Islamic banks in Indonesia is quite low. This is due to the small ratio of real sector financing and payment of zakat. The allocation of real sector and zakat financing to Indonesian Islamic banks is less than 10%, only BRIS in 2014, 2016 and 2017 allocates above 10%. The average achievement of jaib al-maslahah is still below 10% in Indonesian Islamic banks for 20132017. These results indicate that the functions of Indonesian Islamic banks in the social and economic aspects have not been maximized. BRIS, BPS and BVS are the best banks with the value of jaib al-maslahah for the past 2 years, because they managed to maintain the top three positions. BMS consistently held the lowest position for 4 years, but in 2017 it was ninth. The achievement of the value of jaib al-maslahah is fluctuating every year, there is a significant increase and decrease. Table 7 The Achievement of Maqasid Shariah Index in Indonesian Islamic Banks for 2013-2017 Bank MSI MSI MSI MSI MSI MSI Rank 2013 2014 2015 2016 2017 TOTAL BMI 0,1779 0,1610 0,1533 0,1856 0,1931 0,1741 10 MSI 0,2339 0,2295 0,2176 0,2580 0,2404 0,2358 6 BCAS 0,2918 0,2780 0,2745 0,2819 0,2878 0,2828 4 BMS 0,1730 0,1629 0,1637 0,1900 0,2050 0,1789 9 BRIS 0,2395 0,3256 0,2549 0,4040 0,3879 0,3223 2 BPS 0,2639 0,3240 0,3319 0,3673 0,3767 0,3327 1 BSB 0,2419 0,2548 0,2791 0,2898 0,3022 0,2735 5 BNIS 0,2137 0,2129 0,2212 0,2245 0,2311 0,2206 8 BSM 0,2238 0,2118 0,2240 0,2314 0,2447 0,2271 7 BVS 0,1965 0,3036 0,3373 0,3586 0,3369 0,3065 3 Total 2,2559 2,4641 2,4575 2,7911 2,8058 2,5543 Average 0,2255 0,2464 0,2457 0,2791 0,2805 0,2554 Source: Author (2019) The performance based on Maqasid Shariah Index in Indonesian Islamic banks which is the research sample shows inadequate results. Overall, Islamic banks in Indonesia are able to achieve an average value of 25.54% for 5 years of observation. Although the performance based on the maqasid sharia index in Indonesian Islamic banks is still far from expectations with a percentage below 30%, but in general there is a significant increase from 2013- 6 www.doarj.org
7. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective 2017. This increase indicates the hope that Islamic banks in Indonesia can continue to improve and achieve the maximum performance of Maqasid Shariah. Indonesian Islamic Bank is expected to be able to focus on achieving Sharia objectives adequately to prove to stakeholders that all business and non-business activities that take place in line with the objectives and principles of sharia. 4.2 Discussion Referring to stakeholder theory indicates that an entity will try to fulfill stakeholder expectations through actions and achievement of objectives relevant to the values and ethical principles that underlie the formation of the entity. One of the objectives relevant to the values and principles of Indonesian Islamic banks is their success in achieving performance based on Maqasid Shariah Index. Maqasid shariah index is a measure of performance that refers to the characteristics of sharia. Maqasid Shariah's performance is not only oriented towards achieving profit like conventional institutions, but is identical to the success of sharia entities in achieving 3 objectives which include the objectives of Tahdhib al-fard, iqamah al-adl, and jaib al-maslahah. Indonesian Islamic bank as an Islamic-based financial institution is expected to be able to carry out business and non-business activities that are relevant to the ethics and objectives of sharia. Maqasid shariah index is one of the right measures to assess the success of Indonesian Islamic banks in implementing the principles and characteristics of sharia adequately. As an entity that does not only operate for personal gain, it is important for Islamic banks in Indonesia to achieve the maqasid shariah. Through the achievement of maqasid shariah performance, Indonesian Islamic banks can fulfill the expectations of their stakeholders to become entities that benefit all parties and are able to contribute to the progress of the nation. Islamic banks in Indonesia as an entity based on sharia principles, are in a community that is predominantly Muslim, and the regulation for Islamic banking will try to implement actions and achieve relevant objectives with sharia values in an adequate and responsibly. The results of this study contradict the stakeholder theory, because Islamic banks in Indonesia have not succeeded in achieving the maximum performance of the maqasid shariah. The findings in this study are also relevant to several previous studies. Mohammed, Razak & Taib (2008) found a performance based on Maqasid Shariah Index on Islamic International Arabic Banks, Mandiri Islamic Banks, Bahrain Islamic Banks, Islamic Bank of Bangladesh, Bank Muamalat Malaysia, and Sudanese Islamic Banks classified as low and out of expectations. Shaukat & Khan (2008) stated that meezan banks, emirates bank, and Malaysia Islamic bank experienced rapid growth in terms of finance, but the achievement of maqasid shariah performance was low. Antonio, Sanrego & Taufiq (2012) explained that the performance of Maqasid Shariah at Bank Muamalat Indonesia, Bank mandiri syariah, Islamic Arabic International Bank Jordan and Jordan Islamic Bank was far from expectations, but Maqasid Shariah index in Islamic banks in Indonesia was better than Jordan. Rusydiana & Al Parisi (2016) found that achieving profitability ratios was better than achieving the Maqasid Shariah index in Indonesian Islamic banks for the 2011-2014 period. Hartono & Sobari (2017) stated that the performance of maqasid shariah in the bank of sharia people's crediting was better than that of Indonesian Islamic commercial banks, but the achievement of maqasid shariah performance was both still relatively low in 2015. Success as a sharia financial institution can be realized through management, decision making and achieving objectives that can provide justice and benefits for all parties. The ability of Indonesian Islamic banks to achieve maximum performance is not only seen from financial ratios, but also from the spiritual, social and economic aspects adequately. Indonesian Islamic Bank can commit to becoming a sharia financial institution that is able to create prosperity and prosperity for the Indonesian people through the achievement of sharia objectives. Contributions in the field of knowledge and skills can have a positive impact on the advancement of Indonesian Islamic bank human resources and society at large. Maximum achievement of tahdhib al-fard can be one measure of the success of Indonesian Islamic banks in implementing responsibility as a sharia entity. In fact, all Indonesian Islamic banks that were sampled in this study have not yet succeeded in achieving the objectives of tahdhib al-fard adequately. This situation needs special attention for Indonesian Islamic banks. This is because as an entity that not only operates for personal gain, Indonesian Islamic banks are expected to contribute more in the development of science, skills and moral education for every employee and society to improve the quality and productivity of each individual. Islamic banks in Indonesia are also expected to realize justice and avoid negative elements in all their activities, such as usury avoidance, fraud and corruption. Enforcement of justice can be applied through work agreements, prices, products and services that are carried out fairly and do not harm other parties. Through the achievement of adequate iqamah al-adl, Islamic banks have succeeded in meeting the expectations of stakeholders who want the enforcement of justice in sharia entities. To implement justice in social and economic aspects, Islamic banks can do so through profit-sharing activities that are in the mudharabah and musyarakah financing. The profit 7 www.doarj.org
8. Performance Of Indonesian Islamic Banks Based On Maqasid Shariah Index : Stakeholder Theory Perspective sharing system strongly reflects the characteristics of Islamic banks as Islamic financial institutions. Through the achievement of the objectives of iqamah al-Adl adequately, Indonesian Islamic banks can prove to stakeholders that Indonesian Islamic banks have succeeded in running business activities that are integrated with sharia objectives. Required maximization of business transactions in mudharabah and musyarakah aspects. This is due to the small percentage of mudharabah and musyarakah financing from the total financing of Islamic banks in Indonesia. As an Islamic financial institution, Indonesian Islamic banks are not only focused on achieving profits to guarantee the continuity of their business in the long term. Islamic banks also play a role in the progress in the economic, social and welfare sectors of society equally. The concept of maslahah in a sharia entity requires Indonesian Islamic banks to be able to provide benefits to all levels of society. The concept of maslahah in Islam requires Islamic banks in Indonesia to implement it in all business activities and non-business activities. Through maximum payment of zakat funds and real sector financing, Indonesian Islamic banks can provide benefits to the entire community and improve the quality of life of the nation on an ongoing basis. Achieving adequate objectives of jaib al-maslahah can be one measure of the success of Indonesian Islamic banks implementing the concept of maslahah in all activities carried out. The small allocation of financing in the real sector and zakat indicates that the concept of maslahah in Indonesian Islamic banks has not been able to be implemented adequately. 5. 5.1 Conclusion and Recommendation Conclussion From normative aspects in stakeholder theory indicates that Islamic banks in Indonesia with a majority of Muslim population, the existence of regulations and standards regarding Islamic banking will carry out business activities, non-business and achieve Sharia objectives adequately to meet stakeholder expectations and prove themselves as different institutions than conventional financial institutions. The results of the study show a different matter, because Indonesian Islamic banks have not succeeded in achieving performance based on the maqasid shariah index adequately for 2013-2017. Observations over the past 5 years that the authors have done show an increase in the achievement of the Maqasid Shariah Index from 2013-2017. Thus, there is hope that Indonesian Islamic banks will be able to reach maqasid shariah index to the maximum in the following years. Efforts are needed to increase the success of Islamic banks in Indonesia in achieving objectives that are relevant to sharia principles. As an institution formed based on the characteristics of sharia, Indonesian Islamic banks are expected to be able to carry out all activities that are able to provide benefits to all parties and contribute to improving the quality of life together. To gain stakeholder trust, Islamic banks can prove it through maximum achievement of sharia objectives. If stakeholder trust can be achieved, it is not impossible for Islamic banks in Indonesia to be ranked top in the contribution of Islamic bank assets globally. 5.2 Recommendation This study only uses the maqasid syariah index approach as a measure of the performance of Indonesian Islamic banks. Future studies can use other approaches that are also relevant to assessing the performance of Islamic banks, such as the SCNP (Sharia Conformity and Profitability) and IPI (Islamicity Performance Index) approaches. Then, a comparative analysis can also be carried out in assessing the performance of Islamic banks using some of these approaches. Further research can also conduct performance assessments based on the maqasid sharia index approach on other sharia entities, such as sharia insurance. References Alam, M. M., Hassan, S., & Said, J. (2015). Performance of Islamic microcredit in perspective of Maqasid AlShariah: A Case Study on Amanah Ikhtiar Malaysia. Humanomics, 31(4), 374–384. https://doi.org/10.1108/H12-2014-0072 Amaroh, S., & Masturin, M. (2018). The Determinants of Maqasid Shariah Based Performance of Islamic Banks in Indonesia. Iqtishadia, 11(2), 354. https://doi.org/10.21043/iqtishadia.v11i2.3961 Antonio, M. S., Sanrego, Y. D., & Taufiq, M. (2012). An Analysis of Islamic Banking Performance: Maqashid Index Implementation in Indonesia and Jordania. Journal of Islamic Finance, 1(1), 012–029. https://doi.org/10.15604/ejef.2017.05.01.008 Donaldson, T., & Preston, L. E. (1995). The Stakeholder Theory of The Corporation: Concepts, Evidence, and Implications. Academy of Management Review, 20(1), 65–91. Retrieved from http://www.jstor.org/stable/258887 Hartono, S., & Sobari, A. (2017). Sharia Maqashid Index As a Measuring Performance of Islamic Banking: a More Holistic Approach. Corporate Ownership and Control, 14(2), 193–201. 8 www.doarj.org
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