IDEAS home Printed from
   My bibliography  Save this article

Efficiency and competition of Islamic banking in Malaysia


  • Hamim S. Ahmad Mokhtar
  • Naziruddin Abdullah
  • Syed M. Alhabshi


Purpose - In an attempt to enrich the literature of the efficiency of Islamic banks, this study aims to empirically investigate the efficiency of the fully fledged Islamic banks as well as Islamic windows in Malaysia. Design/methodology/approach - This study measures the technical and cost-efficiencies of these banks using the non-parametric frontier method, data envelopment analysis (DEA). Findings - The findings show that, on average, the efficiency of the overall Islamic banking industry has increased during the period of study. The study also revealed that, although the fully fledged Islamic banks were more efficient than the Islamic windows, they were still less efficient than the conventional banks. Finally, Islamic windows of the foreign banks were found to be more efficient than Islamic windows of the domestic banks. Originality/value - The findings of this study will provide some empirical insights as to how these two modes of Islamic banks had fared in the competitive environment from 1997 to 2003.

Suggested Citation

  • Hamim S. Ahmad Mokhtar & Naziruddin Abdullah & Syed M. Alhabshi, 2008. "Efficiency and competition of Islamic banking in Malaysia," Humanomics: The International Journal of Systems and Ethics, Emerald Group Publishing, vol. 24(1), pages 28-48, February.
  • Handle: RePEc:eme:humpps:v:24:y:2008:i:1:p:28-48

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:eee:intfin:v:48:y:2017:i:c:p:1-24 is not listed on IDEAS
    2. repec:lan:wpaper:1108 is not listed on IDEAS
    3. Mohamed M. Mostafa, 2011. "Modeling Islamic banks' efficiency: a non-parametric frontier approach," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 4(1), pages 7-29, April.
    4. Suraya Ahmad & Abdul Rahim Abdul Rahman, 2012. "The efficiency of Islamic and conventional commercial banks in Malaysia," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 5(3), pages 241-263, August.
    5. repec:eee:pacfin:v:46:y:2017:i:pa:p:1-13 is not listed on IDEAS
    6. Hadri Kusuma & Ariza Ayumardani, 2016. "The Corporate Governance Efficiency And Islamic Bank Performance : An Indonesian Evidence," Polish Journal of Management Studies, Czestochowa Technical University, Department of Management, vol. 13(1), pages 111-120, June.
    7. Badreldin F. Salim & Mohamed H. Mahmoud, 2016. "Islamic Finance: Is it a Time to be Considered as an Alternative during Financial Crisis Times? A Comparative Study in Gulf Cooperation Council," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1123-1131.
    8. Rossazana Ab Rahim, 2016. "Does Competition Foster Efficiency? Empirical Evidence from Malaysian Commercial Banks," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 12(1), pages 1-23.
    9. Abdelghani Echchabi & Oladokun Nafiu Olaniyi, 2012. "Malaysian consumers' preferences for Islamic banking attributes," International Journal of Social Economics, Emerald Group Publishing, vol. 39(11), pages 859-874, September.
    10. Filzah Mohamed Othman & Nor Aiza Mohd-Zamil & Siti Zaleha Abdul Rasid & Amin Vakilbashi & Mozhdeh Mokhber, 2016. "Data Envelopment Analysis: A Tool of Measuring Efficiency in Banking Sector," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 911-916.
    11. Mia, Md Aslam & Ben Soltane, Bassem Ibrahim, 2016. "Productivity and its determinants in microfinance institutions (MFIs): Evidence from South Asian countries," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 32-45.

    More about this item


    Banking; Banks; Islam; Malaysia;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:humpps:v:24:y:2008:i:1:p:28-48. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.