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Measuring efficiency of Islamic banks: criteria, methods, and social priorities

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  • Hasan, Zubair

Abstract

This paper provides an appraisal of some of the researches conducted in recent years for evaluating the efficiency of Islamic banks. It is restricted to studies using parametric (SFA) and non-parametric (DEA) models. It finds that they leave much to be desired and the conclusions they arrive at are of suspect validity for a variety of reasons. On a more important side, the criteria – cost or profit – they invariably use for measuring efficiency albeit valid miss the essence of what Islamic banking aims to achieve. These banks must of course pay their way but more than that they have to meet certain social objectives and priorities. The fulfillment of social responsibilities even at the expense of reduced profits has to be the main justification for their existence.

Suggested Citation

  • Hasan, Zubair, 2004. "Measuring efficiency of Islamic banks: criteria, methods, and social priorities," MPRA Paper 2977, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2977
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    File URL: https://mpra.ub.uni-muenchen.de/2977/1/MPRA_paper_2977.pdf
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    Citations

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    Cited by:

    1. Sufian, Fadzlan & Abdul Majid, Muhamed Zulkhibri, 2007. "Bank Ownership, Characteristics and Performance: A Comparative Analysis of Domestic and Foreign Islamic Banks in Malaysia," MPRA Paper 12131, University Library of Munich, Germany, revised 01 Jun 2007.
    2. Hasan, Zubair, 2008. "Ialamic finance education at graduate level: Current position and challenges," MPRA Paper 8615, University Library of Munich, Germany.
    3. Samir Srairi, 2010. "Cost and profit efficiency of conventional and Islamic banks in GCC countries," Journal of Productivity Analysis, Springer, vol. 34(1), pages 45-62, August.
    4. Laurent Weill, 2009. "Do Islamic Banks Have Greater Market Power ?," Working Papers of LaRGE Research Center 2009-02, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    5. Hasan, Zubair, 2016. "Risk-sharing the sole basis of Islamic finance? time for a serious rethink," MPRA Paper 72252, University Library of Munich, Germany, revised 15 Apr 2018.
    6. Hasan, Zubair, 2008. "Islamic Finance Education At The Graduate Level Current State And Challenges," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 16, pages 1-29.
    7. Czerniak, Adam, 2010. "Symptomy kryzysu globalnego a etyka gospodarcza religii światowych. Analiza porównawcza bankowości islamskiej i bankowości klasycznej w kontekście kryzysu finansowego
      [The differences between the c
      ," MPRA Paper 26971, University Library of Munich, Germany.
    8. Kashif Rashid & Adeela Rustam, 2014. "Comparative Analysis of Local and Foreign Banks Efficiency: A Case Study of Pakistan," Oeconomics of Knowledge, Saphira Publishing House, vol. 6(3), pages 7-52, August.

    More about this item

    Keywords

    Key words: Islamic banking; Efficiency criteria; SFA; DEA; Scial priorities. Key words: Islamic banking; Efficiency criteria; SFA; DEA; Scial priorities. Key words: Islamic banking; Efficiency criteria; SFA; DEA; Scial priorities. Islamic banking; Efficiency criteria; SFA; DEA; Scial priorities. Islamic banking; Efficiency criteria; SFA; DEA; Scial priorities;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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