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

Zubair Hasan

MPRA Paper from University Library of Munich, Germany

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.

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 (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-ban and nep-eff
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Published in Islamic Economic Review 2.8(2004): pp. 1-30

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