IDEAS home Printed from https://ideas.repec.org/a/ije/journl/v7y1999i2p1-26.html
   My bibliography  Save this article

Comparative Efficiency Of The Islamic Bank Vis-A-Vis Conventional Banks In Malaysia

Author

Listed:
  • Abdus Samad

Abstract

This paper is an empirical study determining the relative efficiency position of the Islamic bank of Malaysia, i.e., Bank Islam Malaysia Berhad (BIMB) and conventional banks of Malaysia during 1992-1996. The paper examines productive and managerial efficiency in the sources and the uses of banks' funds. The weighted ratio approach has been adopted in measuring various types of efficiencies of the banks. The measures of managerial test indicate that the managerial efficiency of the conventional banks is higher than that of the Islamic bank. ANOVA supports our results as the null hypothesis of the equality of means of the two systems is rejected at 5 percent level of significance. The measures of productivity efficiency test, however, show mixed results. The paper is structured as follows: section 1 provides the introduction, objective, methodology and the rationale of this study; section 2 reviews the literature; section 3 defines banking efficiency and develops the analytical tool for measuring efficiency; and section 4 provides empirical evidence and analysis. Conclusions and the scope for future study are presented in section 5.

Suggested Citation

  • Abdus Samad, 1999. "Comparative Efficiency Of The Islamic Bank Vis-A-Vis Conventional Banks In Malaysia," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 7(1), pages 1-27, June.
    • Handle: RePEc:ije:journl:v:7:y:1999:i:2:p:1-26
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sakarya, Burchan & Kaya, Yasemin, 2013. "Katılım Bankaları Mevduat Bankalarından Farklı mı Çalışıyor [Performance Differentiation Between Participation (Islamic) Banks and Deposit Banks in Turkey]," MPRA Paper 69196, University Library of Munich, Germany.
    2. Aysan, Ahmet F. & Disli, Mustafa & Duygun, Meryem & Ozturk, Huseyin, 2018. "Religiosity versus rationality: Depositor behavior in Islamic and conventional banks," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 1-19.
    3. Ahmet F. Aysan & Mustafa Disli & Huseyin Ozturk, 2018. "Bank lending channel in a dual banking system: Why are Islamic banks so responsive?," The World Economy, Wiley Blackwell, vol. 41(3), pages 674-698, March.
    4. Ahmad, Nor Hayati Bt & Noor, Mohamad Akbar Noor Mohamad & Sufian, Fadzlan, 2010. "Measuring Islamic banks efficiency: the case of world Islamic banking sectors," MPRA Paper 29497, University Library of Munich, Germany.
    5. Saleh Salman, Ali & Zeitun, Rami, 2006. "Islamic Banking Performance in the Middle East: A Case Study of Jordan," Economics Working Papers wp06-21, School of Economics, University of Wollongong, NSW, Australia.
    6. Mohamad Akbar Noor Mohamad Noor & Nor Hayati Bt Ahmad, 2012. "The Determinants of Islamic Banks’ Efficiency Changes: Empirical Evidence from the World Banking Sectors," Global Business Review, International Management Institute, vol. 13(2), pages 179-200, June.
    7. Mohamad Noor, Mohamad Akbar Noor & Ahmad, Nor Hayati Bt & Sufian, Fadzlan, 2010. "The efficiency of Islamic banks: empirical evidence from the Asian countries’ Islamic banking sectors," MPRA Paper 31869, University Library of Munich, Germany.
    8. Pejman Abedifar & Philip Molyneux & Amine Tarazi, 2013. "Risk in Islamic Banking," Review of Finance, European Finance Association, vol. 17(6), pages 2035-2096.
    9. Pejman Abedifar & Shahid M. Ebrahim & Philip Molyneux & Amine Tarazi, 2015. "Islamic Banking And Finance: Recent Empirical Literature And Directions For Future Research," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 637-670, September.
    10. Hassan, M. Kabir & Khan, Ashraf & Paltrinieri, Andrea, 2019. "Liquidity risk, credit risk and stability in Islamic and conventional banks," Research in International Business and Finance, Elsevier, vol. 48(C), pages 17-31.
    11. Noor Asiah Ramli & Siti Shaliza Mohd Khairi & Nor Azizah Razlan, 2018. "Performance Measurement of Islamic and Conventional Banking in Malaysia Using Two-stage Analysis of DEA Model," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(4), pages 1185-1197, April.
    12. Hulusi Inanoglu & Mahmoud A. El-Gamal, 2005. "Inefficiency and heterogeneity in Turkish banking: 1990-2000," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(5), pages 641-664.
    13. Muhammad Afaq Haider & Qasim Raza & Soniya Jameel & Khansa Pervaiz, 2019. "A Comparative Study of Operational Efficiency of Pakistani and Malaysian Islamic Banks: Data Envelopment Analysis Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(5), pages 559-580, May.
    14. Mohamed Bechir Chenguel & Abdelkader Derbali & Meriem Jouiro, 2020. "Installing Islamic banking windows in conventional bank: Effects on performance," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-11, February.
    15. Intekhab Alam & Pouya Seifzadeh, 2020. "Marketing Islamic Financial Services: A Review, Critique, and Agenda for Future Research," JRFM, MDPI, vol. 13(1), pages 1-19, January.
    16. Achraf Haddad & Anis El Ammari & Abdelfettah Bouri, 2019. "Are Islamic banks really more solvent than conventional banks in a financially stable period?," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(11), pages 346-366, November.
    17. Asmild, Mette & Kronborg, Dorte & Mahbub, Tasmina & Matthews, Kent, 2019. "The efficiency patterns of Islamic banks during the global financial crisis: The case of Bangladesh," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 67-74.
    18. Sufian, Fadzlan & Mohamad, A.M Noor & Muhamed-Zulkhibri, Abdul Majid, 2008. "The Efficiency of Islamic Banks: Empirical Evidence from the MENA and Asian Countries Islamic Banking Sectors," MPRA Paper 19072, University Library of Munich, Germany.
    19. Aysen ALTUN ADA & Nilufer DALKILIC, 2014. "Efficiency Analysis in Islamic Banks: A Study for Malaysia and Turkey," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 8(1), pages 9-33.
    20. Sirajo Aliyu & Rosylin Mohd Yusof, 2016. "Profitability and Cost Efficiency of Islamic Banks: A Panel Analysis of Some Selected Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1736-1743.
    21. A. Mahmud S., 2015. "World Islamic Banking: Growth And Challenges Ahead," Review of Business and Economics Studies // Review of Business and Economics Studies, Финансовый Университет // Financial University, vol. 3(3), pages 49-56.
    22. Achraf Haddad & Anis El Ammari & Abdelfettah Bouri, 2019. "Comparative Study of Ambiguity Resolution between the Efficiency of Conventional and Islamic Banks in a Stable Financial Context," International Journal of Economics and Financial Issues, Econjournals, vol. 9(5), pages 111-129.
    23. Shajari , Parastoo & Mohebikhah , Bita, 2012. "Financial Stability in Islamic Banking System the Capacity to React to Current World Wide Crisis," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(4), pages 133-166, July.

    More about this item

    Keywords

    Islamic Economics Journal: IIUM Journal of Economics and Management;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ije:journl:v:7:y:1999:i:2:p:1-26. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gairuzazmi Mat Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feiiumy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.