Does Maqashid Sharia index boost the stability of Indonesian Islamic banks?

Purpose This study aims to assess the impact of implementing Maqashid Sharia on the stability of Islamic banks in Indonesia. Design/methodology/approach The quantitative research design was employed using semi-annual panel data from nine Islamic banks in Indonesia from 2015 to 2024. The study used the feasible generalized least squares method for the analysis. Findings The result of this study shows that the educational grants and personal income indexes have a positive influence on the stability of Islamic banks in Indonesia. However, functional distribution reduces the stability of Islamic banks. Research limitations/implications The first limitation is the limited sample size that only investigates the Islamic banks in Indonesia. The second is the methodology; dynamic panel data is also important to generate robust study results, and the measurement model needs to be reevaluated. Practical implications Islamic banks could improve the position in terms of maintaining stability using Maqashid Sharia measurement. Zakat paid promotes the stability of the Islamic banks. Social implications Maqashid Sharia index performance can be a specific measurement, especially for Islamic banks in Indonesia. This measurement can change the public’s view of Islamic banks that are more profit-oriented. Originality/value This is the first study to examine the Maqashid Sharia index on the stability of Islamic banks in Indonesia. Second, this paper also complements the prior study relating to the Maqashid Sharia index in a cross-country analysis.