Assessing bank performance measurement in islamic banking industry

Applied Master of Islamic Banking and Finance, Politeknik Negeri Bandung, Indonesia

^* Corresponding author: ikhsanramdhoni@gmail.com

Abstract

The Indonesian Islamic banking industry, attaining the age of more than 25 years tend to adopt conventional approach to measure its bank performance. Although this method could well inform the performance of the bank financial, this measurement fails to inform both the characteristics of Islamic banking. This study is designed to evaluate three Islamic bank performance measurements: Sharia Maqashid Index, Sharia Conformity and Profitability (SCnP), and CAMELS. Sharia Maqashid Index approach has three variables: educating individual, establishing justice, and public interest. SCnP approach has two variables: Sharia conformity and profitability. While CAMELS approach has five variables: Capital, Asset Quality, Management, Earning, and Liquidity. This study uses data from Islamic Commercial Banks registered on Bank Indonesia from 2012-2016. The data analytical technique is quantitative method using descriptive approach. The results of the study using Sharia Maqashid Index reveal that there is a difference in Islamic Commercial Banks performance. The used of SCnP reveals that none of Islamic Commercial Banks on upper right quadrant. The used of CAMELS reveals that all of Islamic Commercial Banks in Indonesia have Fairly Healthy predicate. These findings suggest that, to provide a comprehensive picture of its performance, the Islamic banks need to adopt both Sharia-based as well as financial based measurement.