Evaluation of Financial and Maqasid Syariah Performance of Islamic Banks in Southeast Asia (2019–2023)
DOI:
https://doi.org/10.15575/ks.v7i1.41055Keywords:
Islamic Banking, Southeast Asia, Maqasid al-Shari’ah, financial performance, Sharia governanceAbstract
This study aims to analyse the performance of Islamic banks in Southeast Asia through a comprehensive framework that includes both financial and non-financial aspects, particularly those grounded in the Maqasid al-Shari’ah. The research is significant as the rapid growth of Islamic finance in the region has not been matched by systematic performance evaluations. Employing a quantitative approach with an explanatory design, data were collected from financial reports, structured surveys, and interviews, and analysed using panel data regression with the Fixed Effect Model (FEM). The findings reveal a significant post-pandemic recovery among Islamic banks, demonstrated by improvements in profitability, operational efficiency, and asset quality. The Maqasid Syariah Index (MSI) shows varied achievements, with Malaysia and Indonesia leading in the integration of Islamic ethical and social values. Internal factors such as bank size and age, along with external factors such as GDP growth, the Islamic Financial Development Index (IFDI), and Sharia Governance Score (SGS), significantly influence performance. These results underscore the importance of aligning macroeconomic factors, Islamic governance, and financial infrastructure to support the resilience and sustainability of Islamic banking. This study offers an original contribution by developing a performance evaluation model rooted in maqasid principles and provides policy recommendations to enhance the integration and efficiency of the regional Islamic financial system.
References
Abbas, S. Z. M., Mahmud, R., & Manan, N. S. A. (2017). Foreign ownership and performance of Islamic banks. Advanced Science Letters, 23(8), 7594–7596. https://doi.org/10.1166/asl.2017.9530
Abdel-Baki, M., & Leone Sciabolazza, V. (2014). A consensus-based corporate governance paradigm for Islamic banks. Qualitative Research in Financial Markets, 6(1), 93–108. https://doi.org/10.1108/QRFM-01-2013-0002
Abduh, T., Remmang, H., Abubakar, H., & Karim, A. (2024). Entrepreneurship and MSME market orientation toward creative industries: Society Era 5.0 in Makassar city. Asian Economic and Financial Review, 14(2), 76–87. https://doi.org/10.55493/5002.v14i2.4964
Ahsan, T., & Qureshi, M. A. (2022). The impact of Islamic banking model and Islamic financial development on bank performance: evidence from dual banking economies. International Journal of Islamic and Middle Eastern Finance and Management, 15(3), 602–625. https://doi.org/10.1108/IMEFM-05-2020-0248
Akram Laldin, M., & Furqani, H. (2013). Developing Islamic finance in the framework of maqasid al-Shari’ah: Understanding the ends (maqasid) and the means (wasa’il). International Journal of Islamic and Middle Eastern Finance and Management, 6(4), 278–289. https://doi.org/10.1108/IMEFM-05-2013-0057
Al Thnaibat, M., Al-Hajaya, K., & Alshhadat, M. Q. (2024). Do the characteristics of the Sharia Supervisory Board affect the Islamic banks’ performance? Evidence from Arab countries. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-05-2024-0271
Alnor, N. H. A., Al-Matari, E. M., Mohmed, T. E. B., Berradia, H. M., Mohamed, A. M. E., & Benzerrouk, Z. S. (2024). The Effect of Developing Human Capabilities on the Company’s Performance through Developing the Company’s Capabilities. WSEAS Transactions on Business and Economics, 21, 95–108.
Amaroh, S. (2016). Sharia Bank’s Social Responsibility to Stakeholder in the Perspective of Maqâshid Syarî‘ah. Ahkam: Jurnal Ilmu Syariah, 16(1), 41–50. https://doi.org/10.15408/ajis.v16i1.2894
Amir, A. M., Hamzah, N., & Maelah, R. (2024). Materializing Digitalization as Sustainability-Oriented Innovation Among Micro, Small, and Medium-Sized Enterprises. In Corporate Governance and Sustainability: Navigating Malaysia’s Business Landscape (pp. 145–156). https://doi.org/10.1007/978-981-97-7808-9_8
Ananda, A. S., Murwani, I. A., Tamara, D., & Ibrahim, I. I. (2023). Adoption of Digital Marketing Toward Digital Transformation in Indonesian Micro- and Small-Sized Enterprises. 2023 8th International Conference on Business and Industrial Research, ICBIR 2023 - Proceedings, 877–882. https://doi.org/10.1109/ICBIR57571.2023.10147569
Anatan, L. (2023). Micro, Small, and Medium Enterprises’ Readiness for Digital Transformation in Indonesia. Economies, 11(6). https://doi.org/10.3390/economies11060156
Angraeni, B. D., Widodo, S., & Lestari, S. S. (2022). Analisis Pengaruh Non Performing Financing (NPF), Financing to Deposit Ratio (FDR), Biaya Operasional Terhadap Pendapatan Operasional (BOPO) dan Debt to Equity Ratio (DER) Terhadap Return on Equity (ROE) pada Bank Umum Syariah di Indonesia Periode 2016- 2. Masyarif Al-Syariah, 7(1), 128–155.
Ashraf, B. N., Tabash, M. I., & Hassan, M. K. (2022). Are Islamic banks more resilient to the crises vis-à-vis conventional banks? Evidence from the COVID-19 shock using stock market data. Pacific Basin Finance Journal, 73. https://doi.org/10.1016/j.pacfin.2022.101774
Baber, H. (2018). How crisis-proof is Islamic finance? : A comparative study of Islamic finance and conventional finance during and post financial crisis. Qualitative Research in Financial Markets, 10(4), 415–426. https://doi.org/10.1108/QRFM-12-2017-0123
Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Budiman, F. (2016). Pengaruh Kualitas Penerapan Good Corporate Governance (GCG) Terhadap Tingkat Pengembalian dan Risiko Pembiayaan Bank Syariah di Indonesia. Muqtasid: Jurnal Ekonomi Dan Perbankan Syariah, 7(2), 1. https://doi.org/10.18326/muqtasid.v7i2.1-21
Chand, D., Mohan, A., & Walia, A. (2025). Government Funding and Its Influence on Product Innovation in Micro, Small, and Medium Enterprises (MSMEs): A Comprehensive Review. Journal of Information Systems Engineering and Management, 10, 213–237.
Chazi, A., Mirzaei, A., & Zantout, Z. (2024). Are Islamic banks really resilient to crises: new evidence from the COVID-19 pandemic. International Journal of Islamic and Middle Eastern Finance and Management, 17(5), 1027–1043. https://doi.org/10.1108/IMEFM-06-2024-0279
Chen, L.-H., Liaw, S.-Y., & Lee, T.-Z. (2003). Using an HRM pattern approach to examine the productivity of manufacturing firms - An empirical study. International Journal of Manpower, 24(3), 299–320. https://doi.org/10.1108/01437720310479750
Dewi, M. S., Ghalib, S., Said, L. R., & Sopiana, Y. (2025). From Structure to Strategy: How Organization Design Influences Innovation and Performance in Micro, Small, and Medium Enterprises (MSMEs). Journal of Ecohumanism, 4(1), 2352–2365. https://doi.org/10.62754/joe.v4i1.6055
DJP Online. (2024). Dorong UMKM Berkembang, DJP Bebaskan Pajak UMKM Omzet Tertentu. Retrieved 21 October 2024, from Direktorat Jenderal Pajak website: https://www.pajak.go.id/id/berita/dorong-umkm-berkembang-djp-bebaskan-pajak-umkm-omzet-tertentu
Doumpos, M., Hasan, I., & Pasiouras, F. (2017). Bank overall financial strength: Islamic versus conventional banks. Economic Modelling, 64, 513–523. https://doi.org/10.1016/j.econmod.2017.03.026
Fatnassi, I., & Hammami, Y. (2024). Assessing systemic risk of Islamic banks during the COVID-19 pandemic crisis. Applied Economics Letters, 31(11), 1037–1044. https://doi.org/10.1080/13504851.2023.2169239
Garcia Pardo, I. P., & Del Valle Fernández Moreno, M. (2009). Looking into the black-box: analysis of the effectiveness of human resources strategy. Zbornik Radova Ekonomskog Fakulteta u Rijeci / Proceedings of Rijeka Faculty of Economics, 27(1), 31–36.
Harrison, T., & Ibrahim, E. (2016). Islamic finance: Principles, performance and prospects. In Islamic Finance: Principles, Performance and Prospects. https://doi.org/10.1007/978-3-319-30918-7
Ibrahim, M. H., & Rizvi, S. A. R. (2017). Do we need bigger Islamic banks? An assessment of bank stability. Journal of Multinational Financial Management, 40, 77–91. https://doi.org/10.1016/j.mulfin.2017.05.002
Junaedi, D., Masruro, U., Laili, R., Rianita, A. P., & Tamimah, H. (2023). Peran Media Sosial dalam Mendukung Inovasi dan Digitalisasi UMKM. Hatta: Jurnal Pendidikan Ekonomi Dan Ilmu Ekonomi, 1(2), 98–103. https://doi.org/10.62387/hatta.v1i2.45
Katou, A. A., & Budbwar, P. S. (2008). The effect of business strategies and HRM policies on organizational performance: The Greek experience. Global Business and Organizational Excellence, 27(6), 40–57. https://doi.org/10.1002/joe.20235
Katou, A. A., & Budhwar, P. S. (2010). Testing competing HRM-performance linkage models: Evidence from the Greek manufacturing sector. European Journal of International Management, 4(5), 464–487. https://doi.org/10.1504/EJIM.2010.034962
Kilay, A. L., Simamora, B. H., & Putra, D. P. (2022). The influence of e-payment and e-commerce services on supply chain performance: Implications of open innovation and solutions for the digitalization of micro, small, and medium enterprises (MSMEs) in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 119.
Lee, F.-H., Lee, T.-Z., & Wu, W.-Y. (2010). The relationship between human resource management practices, business strategy and firm performance: Evidence from steel industry in Taiwan. International Journal of Human Resource Management, 21(9), 1351–1372. https://doi.org/10.1080/09585192.2010.488428
Liu, E., Liu, Q., Udimal, T. B., Zhu, H., & Yousif, M. (2023). Relationship Between Enterprise Talent Management and Performance Based on the Structural Equation Model Method. Applied Mathematics and Nonlinear Sciences, 8(1), 459–466. https://doi.org/10.2478/amns.2022.2.00029
Mergaliyev, A., Asutay, M., Avdukic, A., & Karbhari, Y. (2021). Higher Ethical Objective (Maqasid al-Shari’ah) Augmented Framework for Islamic Banks: Assessing Ethical Performance and Exploring Its Determinants. Journal of Business Ethics, 170(4), 797–834. https://doi.org/10.1007/s10551-019-04331-4
Moha, N. A., Mokodompit, W. S., Anu, Z. S., Manajemen, J., & Ekonomi, F. (2023). Analisis Pengaruh Likuiditas Terhadap Profitabilitas Bank Umum Syariah Dan Bank Konvensional Periode 2018-2022. Jurnal Ilmiah Wahana Pendidikan, Juli, 9(14), 553–562.
Muis, I., Adhi, T. M., & Kamalia, R. F. (2024). The Impact of Digital Marketing and Innovation on Marketing Performance is Influenced through the Development of a Competitive Advantage. Revista de Gestão Social e Ambiental, 18(8), e6182. https://doi.org/10.24857/rgsa.v18n8-081
Mukhibad, H., Setiawan, D., & Rochmatullah, M. R. (2022). Sharia supervisory board, maqasid syariah, and accounting-based performance: evidence from Indonesia. International Journal of Monetary Economics and Finance, 15(3), 213–231. https://doi.org/10.1504/ijmef.2022.126902
Pham, H. D. (2020). Impact of human resource management practices on enterprises’ competitive advantages and business performance: Evidence from telecommunication industry. Management Science Letters, 10(4), 721–732. https://doi.org/10.5267/j.msl.2019.10.025
Qin, Y., & Lv, D. (2024). A Study on the Relationship between Human Resource Management and Firm Performance Based on VAR Modeling. Applied Mathematics and Nonlinear Sciences, 9(1). https://doi.org/10.2478/amns.2023.2.01566
Rashid, A., & Jabeen, S. (2016). Analyzing performance determinants: Conventional versus Islamic Banks in Pakistan. Borsa Istanbul Review, 16(2), 92–107. https://doi.org/10.1016/j.bir.2016.03.002
Rosman, R., Haron, R., & Othman, N. B. M. (2019). The impact of zakat contribution on the financial performance of islamic banks in malaysia. Al-Shajarah, 2019(Special Issue IslamicBankingandFinance2019), 1–21.
Rumijati, A., & Hakim, A. R. (2023). Innovative work behavior and self-efficacy: Does entrepreneurial leadership impact MSME business performance? Problems and Perspectives in Management, 21(4), 304–315. https://doi.org/10.21511/ppm.21(4).2023.24
S. lafau, S., F. Zalogo, E., & Harita, M. (2021). Analisis Return On Asset (ROA) Dan Return On Equity (ROE) Pada PT. Pos Indonesia (Persero) Tahun 2016-2018. Gastronomía Ecuatoriana y Turismo Local., 1(69), 5–24.
Said, M. M., & Soi, A. B. (2025). Expanding SME product export market through digital innovation in Indonesia. In Dynamic Strategies for Entrepreneurial Marketing (pp. 253–269). https://doi.org/10.4018/979-8-3693-3936-7.ch012
Sari, D., Kusuma, B. A., Sihotang, J., & Febrianti, T. (2023). The role of entrepreneurial marketing & innovation capability in the performance of SMEs during covid-19 pandemic: Evidence of MSMEs in West Java. Cogent Business and Management, 10(1). https://doi.org/10.1080/23311975.2023.2194091
Sari, M., Rachman, H., Juli Astuti, N., Win Afgani, M., & Abdullah Siroj, R. (2022). Explanatory Survey dalam Metode Penelitian Deskriptif Kuantitatif. Jurnal Pendidikan Sains Dan Komputer, 3(01), 10–16. https://doi.org/10.47709/jpsk.v3i01.1953
Singh, D., Khamba, J. S., & Nanda, T. (2014). Enhancing technological innovation in small firms: Role of collaboration. IOP Conference Series: Materials Science and Engineering, 65(1). https://doi.org/10.1088/1757-899X/65/1/012026
Sjachriatin, E., Riyadi, S., & Mujanah, S. (2023). The effects of knowledge-oriented leadership style, digital transformation, and human resource development on sustainable competitive advantage in East Java MSMEs. Uncertain Supply Chain Management, 11(4), 1685–1694. https://doi.org/10.5267/j.uscm.2023.6.021
Song, M., Pan, X., Pan, X., & Jiao, Z. (2019). Influence of basic research investment on corporate performance: Exploring the moderating effect of human capital structure. Management Decision, 57(8), 1839–1856. https://doi.org/10.1108/MD-06-2018-0708
Sueb, M., Syarifah, L., & Putra, R. N. A. (2022). The effect of shariah board characteristics, risk-taking, and maqasid shariah on an Islamic bank’s performance. Banks and Bank Systems, 17(3), 89–101. https://doi.org/10.21511/bbs.17(3).2022.08
Tarique, K. M., Islam, R., Mohamed, M. O., Razak, D. A., & Bin Hamdan, H. (2020). Constructing a Maqasid (objective) based performance measurement index for Islamic banks. International Journal of the Analytic Hierarchy Process, 12(2), 328–354. https://doi.org/10.13033/ijahp.v12i2.770
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z
Tjahjadi, B., Soewarno, N., Anwar, D. N., & Fairuzi, A. (2024). Effect of Human Capital and Information Capital Readiness on Business Sustainability: Do Market Orientation and Business Performance Matter? SAGE Open, 14(1). https://doi.org/10.1177/21582440231221320
Tumewang, Y. K. (2019). A comparison of non-financial performance and earnings quality between QIIB and BIB. Jurnal Ekonomi & Keuangan Islam, 5(1), 25–33. https://doi.org/10.20885/jeki.vol5.iss1.art4
Wright, P. M., & McMahan, G. C. (1992). Theoretical Perspectives for Strategic Human Resource Management. Journal of Management, 18(2), 295–320. https://doi.org/10.1177/014920639201800205
Yuliawati, A. K., Rofaida, R., Gautama, B. P., Millah, R. S., Aryanti, A. N., & Hadian, M. S. D. (2025). Strategies for Business Sustainability through Digital Marketing and Innovation in Aspiring Geopark. GeoJournal of Tourism and Geosites, 58(1), 456–464. https://doi.org/10.30892/gtg.58142-1427
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Fatih Fuadi, Suhendar Suhendar, Hanif Hanif, Anas Malik, Wahyu Iryana
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).