Efficiency of islamic and conventional banks in countries with islamic banking

Akassi Kablan and Ouidad Yousfi ()

MPRA Paper from University Library of Munich, Germany

Abstract: Our study aims at analyzing Islamic banks efficiency over the period 2001-2008. We found that they were efficient at 78.9%. The level of efficiency could however vary according to regions. Asia displays the highest score with 84.64%. Indeed, country like Malaysia and Pakistan implemented reforms in order to allow Islamic banks to better cope with the existing financial system. On the contrary countries with Islamic banking system do not necessarily display efficiency scores superior to the average. Further analyses on commercial banks, in the selected countries strengthen the conclusion for a regulatory environment suiting Islamic banking. Besides, the subprime crisis did not impact Islamic banks as evidenced by the dummy variable. Market power and profitability have negative impact on Islamic banks efficiency. Concentration leads to higher costs through slacks and inefficiency. Again other results from robustness checks appear to stress the specificity of Islamic banks, like their first aim for financing rural population.

Keywords: Islamic Finance; Islamic Banks; performance; efficiency; stochastic frontier analysis (search for similar items in EconPapers)
JEL-codes: G15 G21 G24 (search for similar items in EconPapers)
Date: 2011-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Efficiency of islamic and conventional banks in countries with islamic banking (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:32951

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