Objectives of Islamic Banks in the Management of Asset and Liability: A Decision Process of Deriving Priority

The development of Islamic banking systems has gained great momentum as an essential addition to the global financial market including Malaysia. Nevertheless, clients who supported the system had formed some expectations other than the mechanics of its operations. Above all, they expect that other features like contribution of Islamic banking towards a more equitable distribution of income and wealth, promoting social justice and increased equity participation in the economy are equally essential to become the goals of the Islamic banking operations. Thus, the existence of Islamic banking can be seen as not merely an effort to comply with the shariah, but also to realize the maqasid al-shariah. Hence, the ultimate measure of the worth of a business activity, including Islamic banking, is the value it creates that may contributes to the effectiveness of wealth circulation and resources allocation for the benefits of everyone in the society. This study proposes the usage of AHP methodology in deriving the priority choice in the allocation of financial resources towards the multi-objectives model of Islamic banking, which take into consideration both economic and social objectives. By trying to derive the appropriate weights for each of the objective involved, the results of the study have shown interesting variations from two different groups of judgments and opinions regarding this matter. These have proved that further consideration is needed by the decision makers in IBIs in an effort to reduce the gap between economic and social objectives in the Islamic banking operations as a whole.