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The Efficiency of Islamic Banks: Empirical Evidence from the MENA and Asian Countries Islamic Banking Sectors

Author

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  • Sufian, Fadzlan
  • Mohamad, A.M Noor
  • Muhamed-Zulkhibri, Abdul Majid

Abstract

The paper investigates the efficiency of the Islamic banking sectors in 16 MENA and Asian countries during the period of 2001-2006. The efficiency estimates of individual banks are evaluated using the non-parametric Data Envelopment Analysis (DEA) method. The results suggest that the MENA Islamic banks have exhibited higher mean technical efficiency relative to their Asian Islamic bank counterparts.with pure technical inefficiency outweighs scale inefficiency in both the MENA and Asian countries banking sectors. The empirical findings also indicate that banks from the MENA region were the most efficient banks by dominating the top part of efficiency frontier over the period.

Suggested Citation

  • Sufian, Fadzlan & Mohamad, A.M Noor & Muhamed-Zulkhibri, Abdul Majid, 2008. "The Efficiency of Islamic Banks: Empirical Evidence from the MENA and Asian Countries Islamic Banking Sectors," MPRA Paper 19072, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19072
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    References listed on IDEAS

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    Cited by:

    1. Wanke, Peter & Azad, M.D. Abul Kalam & Barros, C.P., 2016. "Predicting efficiency in Malaysian Islamic banks: A two-stage TOPSIS and neural networks approach," Research in International Business and Finance, Elsevier, vol. 36(C), pages 485-498.
    2. Fakarudin Kamarudin & Bany Ariffin Amin Nordin & Junaina Muhammad & Mohamad Ali Abdul Hamid, 2014. "Cost, Revenue and Profit Efficiency of Islamic and Conventional Banking Sector: Empirical Evidence from Gulf Cooperative Council Countries," Global Business Review, International Management Institute, vol. 15(1), pages 1-24, March.
    3. Alias Mat Nor, 2015. "Impaired Financing Determinants of Islamic Banks in Malaysia," Information Management and Business Review, AMH International, vol. 7(3), pages 17-25.
    4. Wael Moustafa Hassan, 2013. "Efficiency of the Middle East Banking Sector ¨CA Non Parametric Approach: A Comparative Analysis between Islamic and Conventional Banks," Business and Management Research, Business and Management Research, Sciedu Press, vol. 2(4), pages 116-128, December.
    5. Omneya Abdelsalam & Sabur Mollah & Emili Tortosa-Ausina, 2018. "Political connection and bank in(efficiency)," Working Papers 2018-11, Swansea University, School of Management.

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    More about this item

    Keywords

    Islamic Banks; Data Envelopment Analysis (DEA);

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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