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Does Financial Inclusion Drive The Islamic Banking Efficiency? A Post-Financial Crisis Analysis

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  • HASANUL BANNA

    (Ungku Aziz Centre for Development Studies, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia†Department of Finance and Banking, Faculty of Business and Accountancy, University of Malaya, 50603 Kuala Lumpur, Malaysia)

  • MD RABIUL ALAM

    (Ungku Aziz Centre for Development Studies, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia‡Department of Language and Literacy Education, Faculty of Education, University of Malaya, 50603 Kuala Lumpur, Malaysia§Department of English, Asian University of Bangladesh, Dhaka, Bangladesh)

  • RUBI AHMAD

    (��Department of Finance and Banking, Faculty of Business and Accountancy, University of Malaya, 50603 Kuala Lumpur, Malaysia)

  • NORHANIM MAT SARI

    (�Putra Business School, University Putra Malaysia (UPM), 43400 Serdang, Selangor, Malaysia)

Abstract

Considering the reverberations of financial crisis of 2007–09 that the banking industry terribly witnessed, this paper aims to estimate both the non-bias-corrected and bias-corrected efficiency by employing the data envelopment analysis and Simar–Wilson double bootstrapping regression techniques over the period of 2011–2017 and see how the financial inclusion impacts on Islamic banks. This study finds that most of the countries, except some Asian and Middle-Eastern countries, have inconsistent efficiency trends in Islamic banking sector. It also shows that financial inclusion is significantly allied with Islamic banking efficiency. Eventually, the results propose that Islamic banks are still bearing the consequence of that economic recession and, therefore, bank should focus more on financial inclusion since those banks having sound and inclusive financial environment are seen enjoying higher level of financial efficiency.

Suggested Citation

  • Hasanul Banna & Md Rabiul Alam & Rubi Ahmad & Norhanim Mat Sari, 2022. "Does Financial Inclusion Drive The Islamic Banking Efficiency? A Post-Financial Crisis Analysis," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 67(01), pages 135-160, March.
    • Handle: RePEc:wsi:serxxx:v:67:y:2022:i:01:n:s0217590819420050
    DOI: 10.1142/S0217590819420050
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    Cited by:

    1. Nasir Khan & Mahwish Zafar & Abiodun Funso Okunlola & Zeman Zoltan & Magda Robert, 2022. "Effects of Financial Inclusion on Economic Growth, Poverty, Sustainability, and Financial Efficiency: Evidence from the G20 Countries," Sustainability, MDPI, vol. 14(19), pages 1-19, October.

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