Editorial: Maqasid Realisation in Islamic Finance: Components of Framework for Measurement Index

Abstract

While Islamic finance has developed impressively across the globe, efforts have been initiated to measure the growth, its socio-economic impact and realizing the objectives for which the new system has been introduced. Some spade work has been done by experts from the platform of Islamic Research and Training Institute (IRTI), Islamic Devloping Banks (IDB), while Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and some individual researchers have made efforts at preparing rating scales/indices for measuring overall performance, Shariah Compliance (SC) and governance. IRTI is considering about the comprehensive Socio-Economic Development that is multidimensional in nature and may involve other institutions like the State institutions and the Non-Governmental Organisations (NGOs) working for poverty alleviation or socio-economic development. This paper, however, focuses on developing the scales for measurement of the objective achievement by Islamic banks and financial institutions. Indices and rating scales are necessary to enable the stakeholders to make an opinion about any Islamic Banking and Financial Institutions (IBFIs’) adherence to Shariah principles and its performance in fiduciary capacity. As SC is the raison d’etre of Islamic finance, the paper suggests two separate streams for the rating, one for measuring the SC level and the other for governance and fiduciary responsibilities. The both have been given weightage of 100 separately. Ultimate rating could be calculated by adding the score of the both streams.