Performance Measurement System, Attitude Toward Risk and the Performance of Profit Sharing Financing in Indonesian Islamic Bank

This study Was undertaken to investigate the relationship between diagnostic and interactive use ofperformance measurement system (PMS). attitude toward risk and prafit sharing (PS) financing perfarmance in Islamic banks. PSfinancing performance is conceptualised using two dimensions, i.e. the quantity and the quality ofPsfinancing performance. Utilising a survey method, questionnaires were mailed to I 15 Islamic Rural Banks in Indonesia, out ofthem, 69 (62%) were returned and usedfor analysis. The results found positive relationship between diagnostic use of PMS and attitude toward risk and negative relationship between interactive use of PMS and altitude toward risk. Although the results also provide support for the negative relationship between attitude toward risk and the quality of Psfinancing, we find no support for the relationship between attitude toward risk and quantity of rsfinancing. This study provides evidence on the role of PMS in Islamic banking institutions.