Ahmad, Nor Hayati Bt and Noor, Mohamad Akbar Noor Mohamad and Sufian, Fadzlan (2010): Measuring Islamic banks efficiency: the case of world Islamic banking sectors. Published in: Journal of Islamic Banking and Finance , Vol. 27, No. 4 (December 2010)
Download (248Kb) | Preview
The paper investigates the efficiency of the Islamic banking sectors in the world covering 25 countries during the period of 2003-2009. The efficiency estimates of individual banks are evaluated using the non-parametric Data Envelopment Analysis (DEA) method. The empirical findings suggest that during the period of study, pure technical efficiency outweighs scale efficiency in World Islamic banking countries. We find that banks from the high income countries were the leaders by dominating the most efficiency frontier during the period of study.
|Item Type:||MPRA Paper|
|Original Title:||Measuring Islamic banks efficiency: the case of world Islamic banking sectors|
|Keywords:||Islamic Banks: Data Envelopment Analysis (DEA): Performance Evaluation.|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Mohamad Noor|
|Date Deposited:||24. Jul 2011 17:58|
|Last Modified:||12. Feb 2013 21:54|
Avkiran, N.K. (2002) Productivity Analysis in the Service Sector with Data Envelopment Analysis. Camira: N.K. Avkiran.
Batchelor and Wadud (2004) Technical and Scale Efficiency of Islamic Banking Operations in Malaysia: An Empirical Investigation with Longitudinal Perspective: Labuan Bulletin of International Business & Finance 2(1), 2004, 51-69
Benston, G.J. (1965) Branch Banking and Economies of Scale, Journal of Finance 20 (2), 312-331.
Bauer, P.W., Berger, A.N., Ferrier, G. D. and Humphrey, D.B. (1998), Consistency Conditions for Regulatory Analysis of Financial Institutions: A Comparison of Frontier Efficiency Methods, Journal of Economics and Business 50 (2), 85-114.
Berger, A.N. and Humphrey, D.B. (1997) Efficiency of Financial Institutions: International Survey and Directions for Future Research, European Journal of Operational Research 98 (2), 175-212.
Coelli, T. (1996) A Guide to DEAP Version 2.1: A Data Envelopment Analysis (Computer Program), Working Paper, CEPA, University of New England, Armidale.
Coelli, T., Rao, D.S.P. and Batesse, G.E. (1998) An Introduction to Efficiency and Productivity Analysis. Boston, MA: Kluwer Academic Publishers.
Cooper, W.W., Seiford, L. M. and Tone, K. (2000) Data Envelopment Analysis. Boston: Kluwer Academic Publishers.
DeYoung, R. and Hasan, I. (1998), The Performance of De Novo Commercial Banks: A Profit Efficiency Approach, Journal of Banking and Finance 22 (5), 565-587.
El-Gamal and Inanoglu (2004) Islamic Banking in Turkey: Boon or Bane for the Financial Sector, Proceedings of the Fifth Harvard University Forum on Islamic Finance, Cambridge: Center for Middle Eastern Studies, Harvard University.
Evanoff. D.D. and Israelvich, P.R. (1991) Productive Efficiency in Banking, Economic Perspectives Federal Reserve Bank of Chicago (July/August), 11-32.
Hassan, M.K. (2005) The Cost, Profit and X-Efficiency of Islamic Banks, Paper Presented at the 12th ERF Annual Conference, 19th-21st December, Egypt.
Hassan, M.K and Hussein, K.A. (2003) Static and Dynamic Efficiency in the Sudanese Banking System, Review of Islamic Economics 14, 5-48.
Hussein, K.A. (2003) Operational Efficiency in Islamic Banking: The Sudanese Experience, Working Paper No. 1, Islamic Research and Training Institute (IRTI), Islamic Development Bank. 17
Isik, I. and Hassan, M.K. (2002), Technical, Scale and Allocative Efficiencies of Turkish Banking Industry, Journal of Banking and Finance 26 (4), 719-766.
Katib, M.N. (1999) Technical efficiency of commercial banks in Malaysia. Banker’s Journal Malaysia, 111, 40-53.
McAllister, P.H. and McManus, D.A. (1993) Resolving the Scale Efficiencies Puzzle in Banking, Journal of Banking and Finance 17 (2-3), 389-405.
Mokhtar, H., N. Abdullah and S. Al-Habshi (2006), Efficiency of Islamic banking in Malaysia: A stochastic frontier approach, Journal of Economic Cooperation, 18(1): 5-22.
Noulas, A.G. Ray, S.C. and Miller, S.M. (1990) Returns to Scale and Input Substitution for Large U.S. Banks, Journal of Money, Credit and Banking 22 (1), 94-108.
Saleh, A.S and Zeitun, R (2007) Islamic Banks in Jordan: Performance and Efficiency Analysis, Review of Islamic Economics 11 (1), 41-62.
Samad, A. (1999) Comparative Efficiency of the Islamic Bank vis-à-vis Conventional Banks in Malaysia, IIUM Journal of Economics and Management 7 (1), 1-25.
Sealey, C. and Lindley, J.T. (1977) Inputs, Outputs and a Theory of Production and Cost at Depository Financial Institutions, Journal of Finance 32 (4), 1251-1266.
Sufian, F. (2006) Size and Returns to Scale of the Islamic Banking Industry in Malaysia: Foreign Versus Domestic Banks, IIUM Journal of Economics and Management 14 (2), 147-175.
Sufian, F., Noor, M.A.M. and Abdul, M.M.Z,(2008) The Efficiency of Islamic Banks: Empirical Evidence from the MENA and Asian Countries Islamic Banking Sectors. The Middle East Business and Economic Review, Vol.20, No.1
Thanassoulis, E. (2001) Introduction to the Theory and Application of Data Envelopment Analysis: A Foundation Text with Integrated Software. Boston: Kluwer Academic Publishers.
Yudistira, D. (2004), Efficiency in Islamic Banking: An empirical analysis of eighteen banks, Islamic Economic Studies, 12(1): 1-19.
Viverita, Brown,K. and Skully, M. (2007) Efficiency Analysis of Islamic Banks in Africa, Asia, and the Middle East, Review of Islamic Economics 11 (2), 5-16