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Predicting efficiency in Malaysian Islamic banks: A two-stage TOPSIS and neural networks approach

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  • Wanke, Peter
  • Azad, M.D. Abul Kalam
  • Barros, C.P.

Abstract

This paper presents an efficiency assessment of the Malaysian Islamic banks using TOPSIS. In this research, this technique is applied first in a two-stage approach to assess the relative efficiency of Malaysian Islamic banks using the most frequent indicators found in the banking literature. Besides, in the second stage, neural networks are combined with TOPSIS results as part of an attempt to produce a model for banking performance with effective predictive ability. The results reveal that variables related to cost structure have a prominent negative impact on efficiency levels, although some parsimony in equity leveraging derived from Islamic finance principles maybe helpful in achieving higher efficiency levels. Findings also indicate that the Malaysian Islamic banking market also imposes cultural and regulatory barriers to foreign banks, so that their efficiency levels are lower when compared to their national counterparts. Learning curves (trend impact) are relevant in predicting efficiency levels.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:riibaf:v:36:y:2016:i:c:p:485-498
    DOI: 10.1016/j.ribaf.2015.10.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Goodness C. Aye & Giray Gozgor & Rangan Gupta, 2018. "Dynamic and Asymmetric Response of Inequality to Income Volatility: The Case of the United Kingdom," Working Papers 201821, University of Pretoria, Department of Economics.
    2. Wanke, Peter & Maredza, Andrew & Gupta, Rangan, 2017. "Merger and acquisitions in South African banking: A network DEA model," Research in International Business and Finance, Elsevier, vol. 41(C), pages 362-376.
    3. repec:eee:ecofin:v:43:y:2018:i:c:p:71-86 is not listed on IDEAS
    4. repec:eee:pacfin:v:46:y:2017:i:pa:p:1-13 is not listed on IDEAS
    5. Wanke, Peter & Azad, Md. Abul Kalam & Barros, Carlos Pestana & Hassan, M. Kabir, 2016. "Predicting efficiency in Islamic banks: An integrated multicriteria decision making (MCDM) approach," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 45(C), pages 126-141.
    6. repec:eee:eneeco:v:77:y:2019:i:c:p:46-53 is not listed on IDEAS
    7. Wanke, Peter & Barros, C.P., 2017. "Efficiency thresholds and cost structure in Senegal airports," Journal of Air Transport Management, Elsevier, vol. 58(C), pages 100-112.
    8. repec:eee:finsta:v:34:y:2018:i:c:p:12-43 is not listed on IDEAS
    9. repec:eee:riibaf:v:47:y:2019:i:c:p:195-219 is not listed on IDEAS
    10. repec:eee:eneeco:v:68:y:2017:i:c:p:89-108 is not listed on IDEAS

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