Islamic banking sector is gaining popularity globally. However, in recent decades, Malaysia's Islamic banking sector has been reckoned as an influential force in the global…
Abstract
Purpose
Islamic banking sector is gaining popularity globally. However, in recent decades, Malaysia's Islamic banking sector has been reckoned as an influential force in the global economy and became a rapidly growing industry. In fact, the international banking industry has admitted Malaysia as the leading Islamic banking center with the most progressive and attractive planning, strategic directions of development, and numerous incentives for nurturing this sector. Hence, this paper aims to evaluate the performance of Islamic banks in Malaysia based on Balanced Scorecard (BSC) measures and Shari'ah Guidelines Compliance.
Design/methodology/approach
To achieve the objectives of this paper, BSC performance evaluation system and Shari'ah Guidelines Compliance were used based on the data collected through an online poll survey across Malaysian Islamic banks from an aggregate of 994 information focused on 71 items, using 14 respondents in which ten were from the regional level and four were from the headquarters of the bank. Furthermore, nine respondents were bank managers and five were bank employees.
Findings
The findings of the paper are as follows: First, there is a useful connection among BSC estimates, attributes of Shari’ah Compliance and Islamic banks' performance. Second, tremendous improvement has been seen in the Malaysian Islamic banks, which used both the BSC measures and Shari'ah Guidelines Compliance.
Practical implications
The practical implication of the findings is that utilizing the BSC count and Shari’ah consistence characteristics; Islamic banks can better their exhibition and therefore, the banks ought to receive the recorded down rules alongside the BSC measures and Shari'ah ascribes to accomplish a superior presentation, benefit and achievement of Islamic currency advertise.
Originality/value
The novelty/originality of this paper can be seen from the fact that despite the BSC becoming a widely used performance management tool; still, there is a deficiency of standardization between a company and its perception of the term BSC and also mostly, research works on BSC were carried out on the United States- and European-based organizations, but in Malaysia, nothing more was done, especially in the Islamic banking sector, while this model is capable of covering both economic and non-economic estimate of presentation and therefore, considered as a sophisticated presentation computation system for performance evaluation.
Details
Keywords
Raed Abueid, Shafique Ur Rehman and Nhat Tan Nguyen
This study aims to see the influence of a balanced scorecard (BSC) to determine the performance of banks in Palestine. Among the institutions that influence the economy of any…
Abstract
Purpose
This study aims to see the influence of a balanced scorecard (BSC) to determine the performance of banks in Palestine. Among the institutions that influence the economy of any country is the banking sector. Despite the influence of this sector on the economic policies and implementation in Palestine, there appears to be the difficulty of the appropriate approach to measuring its performance. Various techniques have failed to be efficient and effective. It creates an impulse to investigate the impact of a BSC in estimating the performance of banks in Palestine.
Design/methodology/approach
This study adopted a descriptive design of the ex-post facto type with a sample of 126 senior bank staff randomly selected from fourteen Palestinian banks. In total, 3 hypotheses were raised and tested using Pearson's product-moment correlation analysis and multiple linear regression analysis at 0.05 level of significance.
Findings
The result showed that bank performance positively correlated with internal business process perspective (r = 0.633, p < 0.01), followed by customers’ perspective (r = 0.338, p < 0.01), financial perspective (r = 0.321, p < 0.01) and learning and growth perspective (r = 0.230, p < 0.01). While regression analysis showed that the most potent factor was internal business process perspective (Beta = 0.670, t = 10.320, p < 0.01), followed by learning and growth perspective (Beta = 0.185, t = 2.812, p < 0.01) and customers’ perspective (Beta = 0.150, t = 2.469, p < 0.05) and financial perspective (Beta = 0.100, t = 2.200, p < 0.05). This implies that a unit increase in internal business process perspective, learning and growth perspective and customer's perspective will increase bank performance by 67%, 18.5%, 15% and 10%, respectively.
Practical implications
Among others, it was recommended that employees be exposed to the BSC model and its principles through continuous train as to ensure adequate application and implementation for enhanced bank performance. Administrators and stakeholders should ensure that the properties of each dimension of the BSC model are adequately worked on for easy fulfillment of the potentials in the model. It creates an avenue for a full-fledge organization with a workable customer, financial, internal business process, learning and growth perspective.
Originality/value
This is an initial study that used a BSC to determine the performance of banks in Palestine. Prior researchers overlook BSC dimensions composite and relative effect on the prediction of bank performance in Palestine.