Applying the Malmquist Total Factor Productivity Index (MTFPI), this paper provides a new empirical evidence on the performance of the Malaysian Islamic banks over the period of 2001-2004. The results suggest that the productivity of Malaysian Islamic banks has exhibited an inverted U-shaped behavior during the study period. The domestic banks have exhibited higher productivity growth compared to their foreign counterparts. The decomposition of the productivity change index suggests that Malaysian Islamic banks’ productivity progress is mainly attributable to technological change rather than efficiency change during the early years, while the opposite is true during the latter years. Further, the decomposition of the efficiency change index into the pure technical and scale efficiency components suggests that, pure technical efficiency has largely resulted in the increased efficiency of Malaysian Islamic banks. The results indicate that, while the progress of majority of Malaysian Islamic banks is attributable to the technological progress of the medium banks group, the productivity regress experienced by them is due to the technological regress of the small banks group.
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Volume (Year): IV (2007) Issue (Month): 1 (February) Pages: 20-36 Download reference. The following formats are available: HTML
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Handle: RePEc:icf:icfjie:v:04:y:2007:i:1:p:20-36
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