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Comparative Study on the Efficiency of Bangladeshi Conventional and Islamic Life Insurance Industry: A Non-Parametric Approach

Author

Listed:
  • Rahman, Md. Azizur

    (International Islamic University Chittagong)

Abstract

This study endeavor is to examine the efficiency in the both life insurance and life Takaful industry of Bangladesh. The study used Data Envelopment Analysis (DEA) to explore the contributions of technical and efficiency changes to the growth of productivity in the life insurance industries of Bangladesh by using descriptive statistics such as mean, median, standard deviation, minimum & maximum and efficiency concerning the generalized output-oriented Malmquist index for the years 2009-2011. The output-input data consists of a panel of 13 Life Insurance and Takaful Life companies (10 life insurance and 03 Takaful life) in Bangladesh. This study utilizes two inputs and two outputs, namely, commission and management as well as premium and net investment income, respectively. In the DEA technique, efficiency is measured by the Malmquist index. The Malmquist efficiency measures have two components: the efficiency change and technical change index. Efficiency change is again combined by pure efficiency and scale efficiency. It is found that, on geometric mean, the TFP of the Conventional life industry is better than Takaful life mainly due to both efficiency and technical changes where the main source of the efficiency change is scale efficiency rather than pure efficiency. Finding of this study indicates that Conventional and Takaful life industry of Bangladesh, the smaller the size of the companies, the higher the probability for the companies to be more efficient in utilizing their inputs to generate more outputs. This work will beneficial for researchers as well as practitioners to better understand the Bangladeshi life insurance industry.

Suggested Citation

  • Rahman, Md. Azizur, 2013. "Comparative Study on the Efficiency of Bangladeshi Conventional and Islamic Life Insurance Industry: A Non-Parametric Approach," Asian Business Review, Asian Business Consortium, vol. 3(2), pages 80-91.
    • Handle: RePEc:ris:asbure:0111
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    Citations

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    Cited by:

    1. Tabassum Azim & Mustafa Nizamul Aziz, 2021. "Impact of Performance Appraisal on Employees: A Study on Employees of Insurance Organization in Bangladesh," International Journal of Science and Business, IJSAB International, vol. 5(10), pages 41-54.
    2. Wise William, 2020. "The Importance of the Efficiency of Mutual Life Insurers: A Comparison to Stock Life Insurers," Folia Oeconomica Stetinensia, Sciendo, vol. 20(1), pages 474-505, June.
    3. Ilyes Abidi & Mariem Nsaibi & Boutheina Regaieg, 2020. "Challenges of Islamic Insurance," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 69-79.
    4. Asif Ahmed & Rossazana Ab-Rahim, 2021. "A Literature Review on the Relatiohship between Competition and Efficiency for Takaful and Conventional Insurance," Journal of Public Administration and Governance, Macrothink Institute, vol. 11(4), pages 130139-1301, December.

    More about this item

    Keywords

    Data Envelopment Analysis (DEA); Takaful; Malmquist Index; Efficiency; Technical Efficiency; Scale Efficiency; Pure Efficiency;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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