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TRADE PRINCIPLES AND SHARIA-ADHERENCE BANKING PERFORMANCE ANALYSIS BY EMPLOYING MAQASID ISLAMIC SHARIA INDEX APPROACH: STUDY ON INDONESIAN SHARIA BANK

2016; Russian Journal of Agricultural and Socio-Economic Sciences; Volume: 59; Issue: 11 Linguagem: Inglês

10.18551/rjoas.2016-11.09

2226-1184

Wahyuniati Hamid, Ubud Salim, D. Djumahir, Siti Aisjah,

Legal Studies and Policies

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. KEY WORDSTrading principle, Sharia adherence, Maqasid Sharia Index.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. Sharia based business and economic activity are not only performed by mentioned institution above/ It also covers the various aspects, such as macro and micro economic and other economic problems.The concept of sharia banks first appeared in the 1940s.The first established Islamic Sharia bank was MYT-Ghamr Bank founded in Egypt on 1963.Subsequently in 1971, Egypt established Islamic bank under the name of Nasser Social Bank.The first private Islamic Sharia bank that operates in the world is the Dubai Islamic Bank,which was established in Dubai on 1975 by a group of Muslim businessmen hailed from various countries.In the same year Kuwait government set up Kuwait Finance House.Ministers of Foreign Affairs who represents their respective countries as member of the Islamic Conference Organization.inKarachi Pakistan December 1970, Egypt submitted a proposal in the form of a study on the establishment of Islamic Banks International for the purpose of trading and development (International Islamic Bank for Trade and Development) and proposals for the establishment of a federation of sharia banks (Federation of Islamic Bank).Finally, the International Islamic bank was formally established on October 20, 1975 in Jeddah by name of the Islamic Development Bank (IDB).The practice of sharia banking in Indonesia begins with the establishment of the first sharia bank in Indonesia, Bank Muamalat Indonesia in 1992.At that time, sharia banks have no strong legal backing due to lack of legislation specifically laws governing sharia banking.Sharia banking operated under the Act -Law No. 7 1992 on Banking.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.Since then Indonesia adheres to dual banking system, which are