Validity of zakat ratios as Islamic performance indicators in Islamic banking : a congeneric model and confirmatory factor analysis
Joint Authors
Harun, Razali
Numan, Naji Mansur
Source
ISRA International Journal of Islamic Finance
Issue
Vol. 14, Issue 1 (30 Apr. 2022), pp.38-58, 21 p.
Publisher
International Shari'ah Research Academy for Islamic Finance
Publication Date
2022-04-30
Country of Publication
Malaysia
No. of Pages
21
Main Subjects
Abstract EN
Purpose–this paper considers zakat (Islamic tax) as an alternative indicator to measure the performance of Islamic banks (IBs).
it aims to examine whether zakat ratios can be used as Islamic performance (ISPER) indicators for IBs besides the conventional performance (COPER) indicators.
design/methodology/approach-the investigation covered a sample of 214 yearly observations of37 IBs located in Indonesia, Malaysia, Bahrain, Saudi Arabia and the United Arab Emirates for the period2007–2015.
This study used a single-factor congeneric model and confirmatory factor analysis, performed using theAMOS 23.0 software.
findings-the findings assert that the discriminant validity of multi-bank performance, as measured by ISPER [zakat on assets (ZOA) and zakat on equity (ZOE)] and COPER indicators (return on assets, return on equity and operational efficiency in terms of assets), is very high.
Hence, ISPER and COPER measurements are valid, either together to measure the multi-performance of IBs from both the Islamic and conventional perspectives, or independently as each measurement is valid to measure the Islamic and conventional performance if it is used separately.
Research limitations/implications-this paper does not investigate whether the findings are constant across time.
this represents one of the limitations of this study.
practical implications-it is strongly recommended that IBs calculate and disclose zakat ratios, particularly ZOA and ZOE, in their annual reports.
researchers and academicians should use these ratios for measuring the ISPER of IBs, either along with COPER or separately.
originality/value-empirical evidence is provided in this paper on the development and validity of zakat ratios as ISPER indicators in the Islamic banking industry.
Zakat ratios are suitable indicators that can measure IBs’ performance and achieve the goals of IBs as well as those of Islamic economics.
American Psychological Association (APA)
Numan, Naji Mansur& Harun, Razali. 2022. Validity of zakat ratios as Islamic performance indicators in Islamic banking : a congeneric model and confirmatory factor analysis. ISRA International Journal of Islamic Finance،Vol. 14, no. 1, pp.38-58.
https://search.emarefa.net/detail/BIM-1431478
Modern Language Association (MLA)
Numan, Naji Mansur& Harun, Razali. Validity of zakat ratios as Islamic performance indicators in Islamic banking : a congeneric model and confirmatory factor analysis. ISRA International Journal of Islamic Finance Vol. 14, no. 1 (2022), pp.38-58.
https://search.emarefa.net/detail/BIM-1431478
American Medical Association (AMA)
Numan, Naji Mansur& Harun, Razali. Validity of zakat ratios as Islamic performance indicators in Islamic banking : a congeneric model and confirmatory factor analysis. ISRA International Journal of Islamic Finance. 2022. Vol. 14, no. 1, pp.38-58.
https://search.emarefa.net/detail/BIM-1431478
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 54-58.
Record ID
BIM-1431478