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Technical Efficiency Of Islamic Banks Versus Domestic Banks: Evidence From Bangladesh

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  • Abdus Samad

Abstract

This paper empirically estimates the technical efficiencies (TE) of Islamic banks compared to conventional banks in deposit mobilizations and loans production for 2010. This analysis uses the stochastic frontier production function. Estimates of the mean TE of Islamic banks and conventional banks for loans are 59.6 percent and 62.8 percent respectively, and for deposits are 0.61 and 0.60 respectively. Parametric tests, test, Satterthwaite-Welch t-test, Anova F-test, and Walch F-test, indicate no statistical evidence of significant differences between the TE of Islamic and conventional banks. The competitive market structure for loans and deposits markets, evidenced by the Herfindahl-Hirschman Index of less than 400, provides an explanation for the equality of mean TE between Islamic and conventional banks.

Suggested Citation

  • Abdus Samad, 2016. "Technical Efficiency Of Islamic Banks Versus Domestic Banks: Evidence From Bangladesh," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 10(2), pages 31-40.
    • Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:31-40
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    Citations

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    Cited by:

    1. Abdus Samad, 2021. "Analysis of Comparative Efficiencies of Islamic Banks Across Nine South and Southeast Asian Countries," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(1), pages 71-85, January.
    2. Abdus Samad & Mohammad Ashraful Ferdous Chowdhury, 2019. "Comparative Bootstrap DEA Technical Efficiencies and Determinant Factors: Evidence From the Islamic Banks of Bahrain and United Arab Emirates," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 291-308, December.

    More about this item

    Keywords

    Efficiency; Foreign Bank; Domestic Bank; Stochastic Frontier;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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