The efficiency of Islamic banks: empirical evidence from the Asian countries’ Islamic banking sectors

Mohamad Akbar Noor Mohamad Noor (), Nor Hayati Bt Ahmad and Fadzlan Sufian

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract: The paper investigates the efficiency of the Islamic banking sectors in four Asian countries during the period of 2001–2006. The efficiency estimates of individual banks are evaluated using the non-parametric data envelopment analysis (DEA) method. The results suggest that the Asian Islamic banks have exhibited mean technical efficiency highest of 86.5% at 2004 during study period suggesting mean input waste of 13.5%. This implies that the Islamic banks in the Asian countries could have produced the same amount of outputs by only using 86.5% of the amount of inputs they employed. The empirical findings suggest that during the period of study, pure technical inefficiency outweighs scale inefficiency in Asian countries banking sectors. Overall the results imply that during the period of study, although the Asian Islamic banking sectors have been operating at a relatively optimal scale of operations, they were relatively managerially inefficient in controlling their operating costs and utilising their resources to the fullest.

Keywords: Islamic banks; data envelopment analysis; DEA; Asia (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in J. International Business and Entrepreneurship Development 2.5(2010): pp. 154-166

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:31869

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