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Risks and Efficiency in the Islamic Banking Systems: The Case of Selected Islamic Banks in MENA Region

  • Ali Said

    (Strayer University, United States)

Registered author(s):

    The present paper examined the correlation between risks and efficiency within Islamic banks in the MENA area. This paper used three stages of analyses. The first stage consisted of measuring the efficiency of those banks by employing the nonparametric technique, Data Envelopment Analysis (DEA) while the second stage involved analyzing risks by measure credit, operational, and liquidity risks using financial ratios. The third stage would be employing Pearson Correlation Coefficients to examine the correlation between credit, operational, liquidity risks to efficiency for the period of 2006 to 2009. The study results have revealed credit risk has negative relationship to efficiency, while operational risk has found to be negatively correlated to efficiency too. The liquidity risk showed insignificant correlation to efficiency in Islamic banks in MENA area.

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    File URL: http://www.econjournals.com/index.php/ijefi/article/download/337/pdf
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    File URL: http://www.econjournals.com/index.php/ijefi/article/view/337/pdf
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    Article provided by Econjournals in its journal International Journal of Economics and Financial Issues.

    Volume (Year): 3 (2013)
    Issue (Month): 1 ()
    Pages: 66-73

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    Handle: RePEc:eco:journ1:2013-01-7
    Contact details of provider: Web page: http://www.econjournals.com

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    1. Hameeda Abu Hussain & Jasim Al-Ajmi, 2012. "Risk management practices of conventional and Islamic banks in Bahrain," Journal of Risk Finance, Emerald Group Publishing, vol. 13(3), pages 215-239.
    2. Bauer, Wolfgang & Ryser, Marc, 2004. "Risk management strategies for banks," Journal of Banking & Finance, Elsevier, vol. 28(2), pages 331-352, February.
    3. Pejman Abedifar & Philip Molyneux & Amine Tarazi, 2013. "Risk in Islamic Banking," Review of Finance, European Finance Association, vol. 17(6), pages 2035-2096.
    4. Francisco Pérez García & Javier Quesada Ibañez & José Manuel Pastor Monsálvez, 1995. "Efficiency Analysis In Banking Firms: An International Comparison," Working Papers. Serie EC 1995-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Yudistira, Donsyah, 2004. "Efficiency In Islamic Banking: An Empirical Analysis Of Eighteen Banks," Journal of Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 12, pages 2-19.
    6. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    7. repec:lan:wpaper:601084 is not listed on IDEAS
    8. Hussein A. Hassan Al-Tamimi & Faris Mohammed Al-Mazrooei, 2007. "Banks' risk management: a comparison study of UAE national and foreign banks," Journal of Risk Finance, Emerald Group Publishing, vol. 8(4), pages 394-409, August.
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