The Performance of Islamic Banking Based on Sharia Maqashid Index (SMI)

Purpose – This study aims to determine the impact of the implementation of Good Corporate Governance on the Sharia Maqashid Index in Islamic banking in Indonesia. Methodology - The sampling technique in this study was a saturated sample with a sample of 13 Islamic Commercial Banks in Indonesia. The method used in this research is explanatory method with a quantitative approach. Findings - The results showed that Good Corporate Governance had a significant effect on the Sharia Maqashid Index. However, the Sharia Maqashid Index in Islamic Commercial Banks has not experienced a significant increase, so a strategy is needed to improve the performance of Islamic banking


INTRODUCTION
Assessment of the health level of a bank is important because it is a means of evaluating the conditions and problems faced by the bank and determining follow-up actions to overcome bank weaknesses or problems, either in the form of corrective actions by the bank or supervisory actions by the Financial Services Authority (Maramis, 2020).Banks with healthy conditions can be more effective in obtaining profitability.However, if the bank is in an unhealthy condition or even unhealthy the bank must immediately improve its condition in order to obtain the expected profitability.
Profitability is one of the methods used to assess the performance and soundness of a bank, both banking and non-banking.The higher the profitability of the Islamic bank, the better the financial performance.Return On Asset (ROA) is a ratio used to measure the level of profitability.Bank Indonesia, through Bank Indonesia Regulation No.13 / 1 / PBI / 2011, issued a policy on health assessments, namely that banks are required to conduct a soundness assessment using a risk-based bank rating, both individually and on a consolidated basis (Bank Indonesia, 2011).This regulation reinforces its application for Islamic banks through the issuance of the Financial Services Authority Circular Letter Number 10 / SEOJK.03/2014 concerning the Rating of the Soundness of Sharia Commercial Banks and Sharia Business Units (see: http://www.ojk.go.id/id/kanal/perbankan/regulasi/surat-edaran-ojk/Pages/surat-edaran-otoritasjasa-keuangan-nomor-10-seojk-03-2014.aspx).
Assessment with this risk approach is generally known as RGEC which stands for components that are factor in the assessment including Risk Profile, Good Corporate Governance, Earnings, and Capital as regulated in PBI No. 13/1 / PBI / 2011 Chapter IV Article 11 concerning the Mechanism of Consolidated Bank Soundness Level Assessment (Bank Indonesia, 2011).
A bank health assessment using the RGEC method is considered capable of providing a comprehensive picture of the health condition of banks (Amelia, 2018).The factors in RGEC assess banking to corporate governance which do not only consist of management aspects, but the quality of human resources, risks and legal aspects of the company to the company's ability to care and pay attention to the social environment around the company (Maheswari, 2016).As for the advantages of the RGEC method, namely being able to identify problems early, carry out appropriate and faster follow-up improvements, and implement Good Corporate Governance (GCG), and have better risk management so that banks are more resilient in facing crises (Kusumawardani, 2014).
One of the risks in the Risk Profile factor, namely the risk of financing proxied by Non Performing Financing (NPF) has a negative effect on Return On Assets (ROA) in research conducted by Astari, Yasa, and Sujana (2018).The higher the level of problem financing, the lower the profitability that the bank will get.This is in line with the research of Pasaribu, Kowanda, and Paramitha (2015) , Akbar (2018), Dewi dan Yadnyana (2019), Munawaroh dan Azhari (2019) & Utami dan Amanah (2016) which show that there is a negative relationship between nonperforming Finance (NPF) and Return on Assets (ROA).However, research conducted by Iskandar and Laila (2016), Setiawan (2017), Sitompul and Nasution (2019) show different results, namely that Non-Performing Financing (NPF) has no effect on Return on Assets (ROA).
Then the level of liquidity risk proxied by the Financing to Deposit Ratio (FDR) shows that the Financing to Deposit Ratio (FDR) has a positive effect on Return on Assets (ROA) in research conducted by Suwarno and Muthohar (2018).This is in line with research conducted by Agustini and Sulindawati (2020), Aryati and Andayani (2019), Munawaroh and Azhari (2019), Suwarno and Muthohar (2018), and Yusuf (2017) which ,show that there is a positive relationship between Financing to Deposit Ratio (FDR) and Return On Asset (ROA).Meanwhile, research conducted by Ibadil and Haryanto (2014), Amelia (2015), andWirnati andDiyani (2019) shows different results, namely FDR has no effect on ROA.
Furthermore, the level of operational cost efficiency or better known as the BOPO ratio is an indicator of the Earnings factor.Research conducted by Munawaroh and Azhari (2019) shows that BOPO has a negative effect on Return On Assets (ROA).The higher the BOPO level, Pinasti and Mustikawati (2018), Kusumastuti and Alam (2019), and Sitompul and Nasution (2019) which show that there is a negative relationship between BOPO and ROA.Meanwhile, research conducted by Ibadil and Haryanto (2014), Amelia (2015), andWirnati andDiyani (2019) shows different results, namely FDR has no effect on ROA.
The use of performance measurement models based on conventional financial ratios such as RGEC is not suitable to be applied to Islamic banking because the purpose of Islamic banking is different from conventional banking (Mohammed, 2015).Basically, the purpose of sharia banking is not only as a commercial institution but also to achieve benefits in accordance with maqashid sharia, namely to achieve prosperity and avoid evil, so that the performance measurement model based on financial ratios makes it impossible for sharia banking stakeholders to see clearly the different objectives achieved by Islamic banking and conventional banking.Dzuljastri (2008) argues that the performance measurement model based on conventional financial ratios has several disadvantages, namely: 1) will make company managers act in the short term and do not pay attention to long-term plans; 2) can ignore aspects of non-financial measurement and fixed assets so that it will give a wrong view of company managers both at present and in the future; 3) In addition, measurement of company performance based on financial ratios is only based on past performance so that it will not be able to bring the company to achieve goals, whereas if the main focus of the company's activities has more value benefits not only shareholders but also users other interested.
Then another method is needed to measure the performance of Islamic banking, namely the method that is in accordance with the objectives of Islamic banking.According to Antonio (2012) maqashid sharia can be used as a strategic alternative approach to describe the good or bad performance of a company so that it can be implemented in the form of a comprehensive strategic policy.
Abu Zahrah (1997) argues that the existence of Islamic Shari'a is a blessing for humans, so that the objectives to be achieved in establishing Shariah law (Maqashid Sharia) include individual education (Tahdhib al Fard), creation of justice (iqamah al 'adl) and achievement welfare (jalb al maslahah).Furthermore, a measurement of Islamic banking performance that was developed based on the principle of Maqashid Shariah Abu Zahrah.The study resulted in a measurement of Islamic banking financial performance called the Sharia Maqashid Index (SMI).
Sharia Maqashid Index in Sharia Commercial Banks has not experienced a significant increase, so a strategy is needed to improve the performance of Islamic banking.Good Corporate Governance in Islamic banking is one of the factors that can affect the Sharia Maqashid Index.GCG is a governance mechanism an organization is good at managing organizational resources efficiently, effectively, economically and productively based on the principles of transparency, accountability, accountability, independence and fairness in order to achieve organizational goals (Syakhroza, 2008).
Implementation in the implementation of GCG in Islamic banking must meet compliance with sharia principles, this is in accordance with Bank Indonesia Regulation No.8 / 4 / PBI / 2006 concerning the implementation of Good Corporate Governance for Commercial Banks in Indonesia.
In theory, GCG is a concept that is applied to improve company performance through supervision and monitoring of management performance and to ensure management accountability based on the regulatory framework (Fauzi, 2016).
The assessment of Good Corporate Governance in public banks is carried out independently (self assessment) by comparing the fulfillment of each criterion or indicator with the condition of the bank based on relevant data and information, the assessment is guided by Bank Indonesia Regulation No.8 / 4 / PBI / 2006 concerning implementation GCG for commercial banks.In other words, the implementation of effective corporate governance in sharia banking will create good corporate governance that can improve company performance and can reduce risks that may be carried out by the board with its own favorable decisions and generally good corporate governance can increase investor confidence in investing which can affect the company's performance ".

Performance Banking
Bank Indonesia establishes rules for assessing the soundness level of a bank, namely the regulation on the soundness level of a bank using the RGEC method (Risk Profile, Good Corporate Governance, Earnings, and Capital) in accordance with Bank Indonesia Regulation No.13 / 1 / PBI / 2011.According to Bank Indonesia Regulation No. 13/1 / PBI / 2011 concerning the assessment system for the soundness of commercial banks, the assessment of the soundness of commercial banks includes an assessment of the following factors: 1. Risk Profile Risk profile assessment is an assessment of the risks inherent in bank business activities, both quantifiable and non-quantifiable, which have the potential to affect the bank's financial position (Febrianto & Fitriana, 2020).The indicators used are the risk profile factor, namely the risk of financing which is proxied by Non-Performing Financing and liquidity risk which is proxied by the Financing to Deposit Ratio (FDR).

Good Corporate Governance
Good Corporate Governance for Islamic commercial banks is an assessment of the quality of bank management on the implementation of the five principles of Good Corporate Governance, namely transparency, accountability, responsibility, professionalism, and fairness (Hartanto, 2019).In a Bank Indonesia circular letter, it is stated that Islamic Commercial Banks must carry out periodic self-assessments which include 11 assessment factors for GCG implementation as applicable to Islamic Commercial Banks 3. Earnings Rentability is an aspect used to measure a bank's ability to increase profits and is carried out in a period.The use of profitability is also to measure the level of business efficiency achieved by the bank concerned.A healthy bank is a bank that is measured in terms of profitability and will continue to increase above the predetermined standard (Khalil & Fuadi, 2016).The indicators used for the profitability factor, namely BOPO.

Capital
Capital is one of the things that is very important for a company.Likewise with banks, where the capital is used to protect the bank from possible risk of loss resulting from the movement of bank assets, some of which come from third party loans (Mauliza & Daud, 2016).The indicators used in the capital factor are the Capital Adequacy Ratio (CAR)

Sharia Maqashid Index (SMI)
There are two main objectives of sharia accounting, namely: 1) as an instrument of accountability fulfilling obligations to Allah (hablun min'allah), individuals and community environment (hablun min'an-nas); 2) as an instrument to help create social and economic justice as desired in the Islamic Ekonomi.Abu Zahrah (1997) argues that the existence of Islamic Shari'a is a blessing for humans, so that the objectives to be achieved in the establishment of Sharia law (Maqashid Shariah) include:

Good Corporate Governance (GCG)
Good Corporate Governance (GCG) is a governance mechanism an organization is good at managing organizational resources efficiently, effectively, economically and productively based on the principles of transparency, accountability, accountability, independence and fairness in order to achieve organizational goals (Syakhroza, 2008).Implementation in the implementation of GCG in Islamic banking must meet compliance with sharia principles.In theory, GCG is a concept that is applied to improve company performance through supervision and monitoring of management performance and to ensure management accountability based on the regulatory framework (Fauzi, 2016).GCG is needed to encourage the creation of an efficient, transparent and consistent market with laws and regulations.GCG needs to be supported by three interconnected pillars, namely the state and its instruments as regulators, the business world as market participants and the community using products and services in the business world.Based on Bank Indonesia Regulation No.8 / 4 / PBI / 2006 concerning the implementation of GCG for commercial banks, the elements of GCG in Islamic banks are the dimensions in the quality of their implementation as follows (Ferdyant, 2014): 1) Implementation of duties and responsibilities of the board of commissioners.
2) Implementation of duties and responsibilities of directors.
3) Completeness and implementation of committee duties.4) Implementation of DPS duties and responsibilities.
5) The implementation of sharia principles in the activities of raising funds and channeling funds and services.6) Handling conflicts of interest.7) Application of the internal audit function.8) Application of compliance function.9) Application of the external audit function.10) Transparency of financial and non-financial conditions, reports on the implementation of good corporate governance and internal reporting.11) Maximum channeling of funds.
These dimensions have several indicators that can be used as measuring instruments.The value of each indicator is calculated by a scoring system, if the indicator referred to is disclosed in the Sharia Commercial Bank GCG report then given a value of 1 while if the indicator in question is not disclosed it will be given a value of 0. Then, based on the results of the analysis the GCG implementation rating for each indicator, as follows: Then after classifying based on composite predicate values, results will be obtained which can be used to measure the implementation of Good Corporate Governance in Islamic Commercial Banks.

METHODOLOGY
Method used for data collection in this study uses explanatory methods with quantitative approaches.In addition, the research design used is causality.The object of research used is good corporate governanc (gcg) as an independent variable (x) and sharia maqashid index (smi) as the dependent variable (y).The population in this study is sharia commercial banks in indonesia.The sampling technique in this study is a saturated sample with a total sample of 13 sharia commercial banks in indonesia that are registered with ojk.
Data analysis techniques in this study using a test through the influence of the test panel data regression with t-test and test the coefficient of determination (r2).the research was tested using the classic assumption test, namely the multicolourity test and heteroscedasticity.The analysis tool used is eviews 9.The aim is to learn how the influence of several independent variables with the dependent variable.

RESULTS AND DISCUSSION
Based on the results of the analysis conducted by the author, the descriptive analysis and interpretation of the overall data from the research findings or field findings which include a general description of each research variable are as follows: 1. Overview of theVariables Sharia Maqashid Index (SMI)

Bank Sharia Maqashid Index (SMI) IK-T1
IK-T2 IK-T3 SMI Ranking A 0,007900 0,007600 0,007600 0,023400 13 B 0,003100 0,215200 0,120300 0,338300 1 C 0,003600 0,224300 0,086700 0,314600 4 D 0,002400 0,202600 0,103700 0,308200 6 E 0,000000 0,118600 0,097500 0,215800 11 F 0,005800 0,189800 0,097600 0,292800 8 G 0,001900 0,177500 0,115800 0,294900 7 H 0,000300 0,123000 0,098500 0,222000 10 I 0,002500 0,236700 0,098300 0,337400 2 J 0,002800 0,210300 0,101500 0,314500 5 K 0,001900 0,226500 0,099400 0,327500 3 L 0,120900 -0,022900 0,117600 0,215300 12 M 0,062800 0,041529 0,128772 0,232901 9 Source: Islamic Banks Period 2017-2020 Based on the data in table 4, it can be seen that the best in implementing the first goal of educating individuals (Tahdzib al-Fard) is Bank L.This is because MSI has the highest educational and training grant value compared to other Islamic banks.Implementation of the second objective is to uphold justice (Iqamah al-Adl), Islamic banks have the highest value is Bank I.This is because Bank I gets the highest distribution function value when compared to other Islamic banks.The third objective is to create benefits (Jalb-al Maslahah), which has the highest value is Bank B. This is because Bank B is a sharia bank that gets the highest profitability value compared to other Islamic banks.The results of the accumulation of the three maqashid syariah objectives were obtained by the SMI score.Based on the data in table 4, it shows that in general the highest SMI value for all purposes in the 2017-2020 period is Bank B. This is because Bank B has a high value in achieving performance indicators for the second and third goals so that the acquisition of SMI scores becomes high.It can be concluded that the better the performance of Islamic banks in carrying out the objectives of maqashid sharia which is the main goal in achieving Islamic banks, the better the value of SMI.This is because the Islamic bank reveals every indicator that is used as an assessment for the implementation of Good Corporate Governance very well.Then all sharia commercial banks have good categories namely, Bank B, Bank C, Bank D, Bank F, Bank G, Bank H, Bank I, Bank J, Bank K, Bank L, and Bank M. Whereas those with good enough categories are Bank A, Bank C, Bank K and Bank M. Widarjono (2009)  The implementation of effective corporate governance in Islamic banking will create the implementation of good corporate governance that can improve company performance, and can reduce the risks that may be carried out by the board with decisions that benefit themselves and generally good corporate governance can increase investor confidence to invest their capital which can affect the company performance.

Determination of the Data Panel Regression Model
Theoretically, GCG is a concept that is applied to improve company performance through supervision and monitoring of management performance and to ensure management accountability based on a regulatory framework (Fauzi, 2016).
This research is in line with research by Darwis (2009) regarding the effect of Corporate Governance on company performance and the results of this study state that the implementation of Good Corporate Governance has an effect on company performance.In addition, the results of research conducted by James and Joseph (2015) regarding the mechanism of corporate governance and bank performance with a sample of 18 banks.The results of this study state that the implementation of Good Corporate Governance has an effect on banking performance.

CONCLUSION
Based on the results of the research and discussion, the following conclusions can be drawn: 1) Implementation of Good Corporate Governance in Islamic Commercial Banks for fouryears, 2017-2020 can be categorized into 3 (three) categories namely very good, good and quite good.2) Sharia Maqashid Index in Sharia Commercial Banks for four years namely 2017-2020 experienced a fluctuating development with an index range between 0.215300-0.338300and there are still some Islamic banks that do not disclose the allocation of funds for several indicators.3) Good Corporate Governance (GCG) affect the performance of Islamic Banking based on the Sharia Maqashid Index (SMI).This shows that if Good Corporate Governance is implemented properly in accordance with predetermined regulations it can improve the performance of sharia commercial banks both in terms of management and financial aspects.The effect of the implementation of Good Corporate Governance on the Performance of Islamic Banking based on the Sharia Maqashid Index is only 11.0134%.This indicates that Good Corporate Governance has not played an optimal role to improve the performance of Islamic commercial banks.

Table 1
Scale and Ranking of Conformity RatingIndicators Weight of the Dimensions of Good Corporate Governance Source: Bank Indonesia Circular Number.12/13/DPbS, 2010 Furthermore, the results of multiplication between ranks and weight values can be classified based on the composite predicate value of the quality ofimplementation Good Corporate Governance.The composite predicate values are as follows :

Table 5
Good Corporate Governance (GCG) Based on table 5 above, it can be seen that the implementation of Good Corporate Governance in Sharia Commercial Banks in Indonesia in 2017-2020 is categorized into 3 (three) categories namely very good, good and sufficient well.This can be proven from the composite value obtained by each Islamic bank.Islamic banks that have a very good category in the implementation of Good Corporate Governance are Bank H, Bank I and Bank L.
states that there are several methods commonly used in estimating regression models with panel data, namely least square pooling (Common Effect),Fixed Effectapproach and random effect approach (Random Effect) by doing the Chow, Hausman and Langrange Multiplier tests.