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The efficiency patterns of Islamic banks during the global financial crisis: The case of Bangladesh

Mette Asmild, Dorte Kronborg, Tasmina Mahbub and Kent Matthews

The Quarterly Review of Economics and Finance, 2019, vol. 74, issue C, 67-74

Abstract: The Global Financial Crisis (GFC) has refocussed attention on Islamic banking as an alternative business model for banking. Studies of the performance of Islamic banks during the Global Financial Crisis have typically used one-step or two-step methods based on Data Envelopment Analysis (DEA) with mixed results. But such techniques are limited by the inability to identify the nature and structure of the inefficiencies with respect to the improvement potentials on different variables. In this paper we apply Multi-directional Efficiency Analysis (MEA) which facilitates an understanding of the differences in inefficiency patterns for a set of banks in Bangladesh from 2001 to 2015. We confirm the consensus finding that Islamic banks outperformed conventional commercial banks during the GFC period but additionally identify differences in inefficiency from specific variables. Such information can provide important insights to managers and regulators.

Keywords: Islamic banks; Multi-directional Efficiency Analysis (MEA); Bangladesh (search for similar items in EconPapers)
JEL-codes: C65 G21 G29 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:74:y:2019:i:c:p:67-74

DOI: 10.1016/j.qref.2018.04.004

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