An examination of technical, pure technical and scale efficiencies in GCC banking

Al‐Muharrami, Saeed

doi:10.1504/ajfa.2008.019950

Cited by 31 publications

(21 citation statements)

References 28 publications

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“…Several studies attempted to assess the efficiency measured by the ROA and the ROE of IB (Darrat, Topuz, & Yousef, 2002;Goaied & Sassi, 2010;Hassan, 2005;Johnes, Izzeldin, & Pappas, 2014;Muharrami, 2008;Sufian & Akbar Noor Mohamad Noor, 2009). Darrat et al (2002), Hassan (2005), Muharrami (2008) and Sufian and Akbar Noor Mohamad Noor (2009) claimed that IBs are significantly more efficient than conventional ones.…”

Section: Data and Model Developmentmentioning

confidence: 99%

“…Darrat et al (2002), Hassan (2005), Muharrami (2008) and Sufian and Akbar Noor Mohamad Noor (2009) claimed that IBs are significantly more efficient than conventional ones. In this case, Goaied and Sassi (2010) showed that IBs are more efficient in maintaining economic system stability, reducing the moral hazard, and adverse selection problems and more conducive to poverty alleviation.…”

Section: Data and Model Developmentmentioning

confidence: 99%

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Banks and economic growth in developing countries: What about Islamic banks?

Daly

Frikha

2016

Cogent Economics & Finance

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Islamic banks (IBs) have a significant role in the growth of gross domestic product of the developing countries. The Islamic participatory schemes integrate the assets of lenders and borrowers. They allow enable IBs to lend on a longer term basis to create projects with higher risk-return profiles and, thus, to support economic growth. Our investigation examines the contribution of Islamic finance in economic growth. Using a panel data-set, we compare between IBs and conventional banks in their adding to economic growth. We studied a sample of 120 banks between 2005 and 2012. By means of three ordinary least-square regressions, our empirical investigation reveals that the development of non-usurious banks supports economic growth. Moreover, the cooperation between the two financing modes improves economic growth. The integration of this new funding never neglected the role of the conventional method of financing. The practice of IBs is also away from their theoretical mode in terms of participation results.

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Section: Data and Model Developmentmentioning

confidence: 99%

Section: Data and Model Developmentmentioning

confidence: 99%

Banks and economic growth in developing countries: What about Islamic banks?

Daly

Frikha

2016

Cogent Economics & Finance

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“…The evidence from previous empirical studies of Islamic and conventional banking is mixed: some find no significant difference in efficiency between the two types of banking (Abdul-Majid et al 2005b;El-Gamal and Inanoglu 2005;Mokhtar et al 2006;Bader 2008;Hassan et al 2009;Shahid et al 2010); some studies do not test whether observed differences in efficiency are significant and this is mainly due to small sample size (Hussein 2004;Al-Jarrah and Molyneux 2005;Said 2012). One study (Al-Muharrami 2008) claims that Islamic banks are significantly more efficient 8 An alternative approach using data mining can be found elsewhere (Emrouznejad and Anouze 2009;.…”

Section: Literature Reviewmentioning

confidence: 99%

A Comparison of Performance of Islamic and Conventional Banks 2004 to 2009

2012

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We compare, using data envelopment analysis (DEA) and meta-frontier analysis (MFA), the performance of Islamic and conventional banks during the period [2004][2005][2006][2007][2008][2009]. The use of nonparametric MFA is new to the Islamic banking context. Our DEA finds no significant difference in mean efficiency between conventional and Islamic banks when efficiency is measured relative to a common frontier. The MFA however, reveals some fundamental differences between the two bank types. In particular, the modus operandi in Islamic banking appears to be less efficient on average than the conventional one. Managers of Islamic banks, however, make up for this as mean efficiency in Islamic banks is higher than in conventional banks when efficiency is measured relative to their own bank type frontier. A second-stage analysis shows that differences between the two banking systems remain even after banking environment and bank-level characteristics have been taken into account. These findings are relevant to both policy-makers and regulators. In particular, Islamic banks should explore the benefits of moving to a more standardized system of banking, while the underperformance of conventional bank managers could be examined in the context of the on-going remuneration culture.

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“…The first group examined a sample of uniquely IBs from different countries (Yudistira, 2004;Hassan 2005Hassan , 2006Sufian, 2009;Viverita et al, 2007) or from one single country (Hassan & Hussein, 2003;Saaid et al, 2003;Saaid, 2005;Kamaruddin et al, 2008). The second group of studies used a comparative approach and can be divided according to the obtained results: studies showing the absence of any difference between IBs and CBs in terms of efficiency (Abdul-Majid et al, 2005;El-Gamal & Inanoglu, 2005;Mokhtar et al, 2006;Bader, 2008;Hassan et al, 2009;Shahid et al, 2010); other studies did not test the significance of the difference in efficiency between the IBs and CBs for lack of observations (Hussein, 2004;Al-Jarrah & Molyneux, 2005;Said, 2012); while few studies have shown a higher efficiency of IBs compared to CBs (Yudistira, 2004;Masruk & al., 2007;Al-Muharrami, 2008;Zahoor et al, 2011); and some other studies attested for the pre-eminence of CBs in terms of efficiency (Hassan, 2006;Mokhtar et al, 2007Mokhtar et al, , 2008Safiullah, 2010;Sraïri, 2010).…”

Section: Literature Reviewmentioning

confidence: 94%

A Meta-Frontier Function for the Estimation of Islamic and Conventional Banks’ Cost and Revenue Efficiency: The Case of Malaysia from 2006 to 2012

Ghroubi¹,

Abaoub²

2016

IJBM

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We measure cost and revenue efficiency of the Islamic and conventional Malaysian banks by using the stochastic frontier method and the meta-frontier analysis (MFA) over the period [2006][2007][2008][2009][2010][2011][2012]. The use of MFA allows for the correction of the efficiency measurement errors caused by the technological and operational gap. The specific as well as the common frontiers obtained by the stochastic frontier method show the superiority of Islamic banks (IBs) compared to conventional banks (CBs) in terms of cost and revenue efficiency. This can reflect their high managerial capability. Efficiency measurement using MFA partially revealed different results. CBs have higher annual averages of cost efficiency scores than those of IBs over the period 2006-2011. The observed evolutionary trends of these averages contradict those of the capital base. This change in results is explained according to Johnes et al. (2013) by the modus operandi of IBs which seems in average less efficient than that of CBs. As for revenue efficiency, IBs are more efficient than CBs over the entire study period even though the evolution of the technological gap ratio confirms the inefficiency of their modus operandi. These results may be useful to political decision-makers and regulatory authorities.

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An examination of technical, pure technical and scale efficiencies in GCC banking

Cited by 31 publications

References 28 publications

Banks and economic growth in developing countries: What about Islamic banks?

Banks and economic growth in developing countries: What about Islamic banks?

A Comparison of Performance of Islamic and Conventional Banks 2004 to 2009

A Meta-Frontier Function for the Estimation of Islamic and Conventional Banks’ Cost and Revenue Efficiency: The Case of Malaysia from 2006 to 2012

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