scholarly journals Effects of Macroeconomics Factors toward Efficiency in Banking

JEJAK ◽  
2018 ◽  
Vol 11 (2) ◽  
pp. 390-400 ◽  
Author(s):  
Faaza Fakhrunnas ◽  
Faiza Husnayeni Nahar ◽  
Hilman Fikri Albana
Keyword(s):  
Data Envelopment Analysis ◽  
Interest Rate ◽  
Growth And Development ◽  
Financial Statement ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Bank Efficiency ◽  
Macroeconomic Factors ◽  
Conventional Banks

The main objective of this study is to analyze the effect of macroeconomic factors toward efficiency in Islamic and Conventional Banking. Banking as one of components in financial system that highly contributes to the growth and development of the economy in a country, especially after establishment of the first Islamic bank in Indonesia at the year of 1992. Afterwards, Islamic banking began to develop and start to compete with conventional banking. Hence, in order to survive and do fair competitiveness, Islamic and Conventional banking have to maintain its efficiency. This study uses the methodology of Data Envelopment Analysis (DEA). This study also analyze the macroeconomics factors namely inflation, interest rate of Bank indonesia and the growth of Gross Domestic Product (GDP) which affects the bank efficiency. Our data is obtained from annual financial statement published by each islamic and conventional bank and Bank Indonesia starting from 2007 to 2016. This study shows that conventional banks have higher efficiency than Islamic banks, while crisis in 2008 had no significant effect on the efficiency of Islamic and conventional banking. However, a decrease in the level of efficiency that occurs in conventional banking indicates that conventional banking is more sensitive to the crisis.

scholarly journals A meta-crisis banking efficiency study in the MENA region

2020 ◽  
Vol 11 (9) ◽  
pp. 2087-2112
Author(s):  
Ioannis Anagnostopoulos ◽  
Emmanouil Noikokyris ◽  
George Giannopoulos
Keyword(s):  
Empirical Work ◽  
Efficiency Index ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Gulf Region ◽  
Bank Efficiency ◽  
Content Type ◽  
Conventional Banks ◽  
The Cost ◽  
Revenue Efficiency

Purpose The purpose of this paper is to comparatively examine the cost and the overlooked revenue efficiency of Islamic and commercial banks in the aftermath of the crisis, operating in nine MENA-based countries during the 2010-2017 financial period, where the established empirical work is relatively limited. The authors also update the research where they use recent data sets and they provide for a targeted, structured literature review pre- and post-crisis in the Gulf region. Design/methodology/approach The authors examine cost and revenue efficiency of 25 major Islamic banks (IBs) and 25 major conventional banks (CBs). They conduct tests on the determinants of such variables. In the first stage of the analysis, they measure efficiency by using the data envelopment analysis (DEA) technique. The analysis performs regressions where these also reveal that the bank efficiency index is influenced by various bank type-specific attributes. It also seems that tighter restrictions on bank activities are negatively associated with bank efficiency. Second stage analysis, which accounts for banking environment and bank-level characteristics, confirms these results. Findings Conventional banks are both more cost and revenue efficient than Islamic banks over the period under examination. The analysis also reveals that the bank efficiency index is influenced by bank-type attributes. Greater presence of fixed capital resources has positive effects on growth in both Islamic and conventional banking. The major constraints impeding Islamic banking growth include labour costs. The authors examine whether and how bank-type orientation affects the cost and revenue efficiency of conventional and Islamic banks. They find that post-crisis Islamic banks underperform their conventional counterparts on both accounts within a mixed banking system. Research limitations/implications This study did not include comparative data before the 2008 financial crisis. There is also a great deal of heterogeneity among Islamic banks in the samples that have been examined here and by other researchers and the constructed efficiency scores should be interpreted cautiously as divergent Islamic banks are pooled in the same samples. Practical implications This study identified factors that may help bank managers to improve their financial outlook by controlling revenue and cost efficiency profitability. These factors could as well help to understand how some indicators affect both cost and revenue efficiency, particularly in Islamic banking. It also seems that tighter restrictions on Islamic bank activities are negatively associated with bank efficiency. Islamic banks that directly compete with their conventional counterparts in the aftermath of the crisis are less efficient on both the cost and revenue frontiers. They are potentially hindered by the differential regulations of supervising authorities in dual banking systems. Social implications The authors provide recommendations regarding regulatory and other issues that are relevant to Islamic banking and further research is suggested. Findings are relevant to a variety of stakeholders (managers, policymakers and regulators). Islamic banking authorities could re-examine the benefits of partially moving to a more standardized/conventional system of banking by lifting some trading restrictions. In addition, developing and maintaining managerial skills is an indispensable instrument for the long-term endurance of any system. A related aspect is thus an effort to determine the holistic efficiency (including managerial) of Islamic banks as a guide for policymakers to improve managerial performance. Originality/value There is relatively limited empirical work that investigates the efficiency between Islamic and conventional banking in the aftermath of the crisis in the Gulf region despite the growing importance of this region on political and economic levels. The authors also examine the revenue efficiency measure often under-researched in the literature and particularly important for comparative studies. Overseas-owned banks have attained much higher infiltration levels in middle-eastern countries over the past decade. It has also been suggested that market penetration differences may also be related to bank efficiency concerns among countries and their financial systems as opposed to types of banks.

scholarly journals Efficiency versus Maqashid Sharia Index: an Application on Indonesian Islamic Bank

2018 ◽  
Vol 2 (2) ◽  
Author(s):  
Aam S. Rusydiana ◽  
Irman Firmansyah
Keyword(s):  
Data Envelopment Analysis ◽  
Banking Industry ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Bank Efficiency ◽  
Islamic Bank ◽  
Market Inefficiency ◽  
Efficiency Performance ◽  
Dea Efficiency ◽  
Dea Method

The Development of Islamic Banking Industry in Indonesia relatively shows a good tendency. In the market, inefficiency would be the great obstacles in head to head to conventional bank. Despite of efficiency performance in Islamic Bank, Islamic Bank also must have sharia compliance performance. So it needed to identified the efficiency of Islamic Bank in Indonesia and the achievement of Maslahah in term of three aspects, there are education, the creating of justice, and the attainment of welfare. This study would try to measure the efficiency of Islamic Banking Industry with Data Envelopment Analysis (DEA) method and also to evaluate the performance by using Maqasid Sharia Index (MSI). Banxia Frontier Analyst 3.1 used in the data calculation. The calculation of the level of Islamic Bank efficiency in this study are relative, not absolute. Result of this study indicate four main findings, first, Islamic bank involve in quadran 1 is Islamic bank who reached the highest efficiency and the best performance; there are BMI and Bank Panin Sharia. Islamic bank involve in quadran 2 is Islamic bank who reached the highest efficiency and the lowest performance, there are BSM, Maybank Sharia, and Bank Sharia Bukopin. Islamic bank involve in quadran 3 is Islamic bank who reached the lowest efficiency and have a good performance, there are BRI sharia, and BCA sharia. Islamic bank involve in quadran 4 is Islamic bank who reached the lowest efficiency and the lowest performance, there are Bank Mega Sharia, Victoria Sharia, BNI Sharia, and BJB Sharia.Keywords: Maqasid Index, Efficiency, DEA, Efficiency-Maqasid Quadrant (EMQ) 

scholarly journals Islamic Banks vs. Conventional Banks in Bangladesh: A Comparative Study Based on its Efficiency in Operation

2020 ◽  
Vol 4 (1) ◽  
pp. 29-37 ◽  
Author(s):  
Faisal Ahmad
Keyword(s):  
Data Envelopment Analysis ◽  
Technical Progress ◽  
Cost Efficiency ◽  
Commercial Banks ◽  
Productivity Index ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Factor Productivity ◽  
Conventional Banks ◽  
Better Than

The main purpose of this study is to make a comparison between Islamic banks (IBs) and Conventional banks (CBs) in Bangladesh based on its efficiency in operation. The Data Envelopment Analysis (DEA) is employed under CRS and VRS approach, which allows for the decomposition of efficiency into technical, allocated and cost efficiency. The study also measures changes in productivity over the time as a result of technical progress by employing the Malmquist Total Factor Productivity Index. The results explain that the technical efficiency of IBs is better than that of CBs, but allocated and cost efficiency (CE) of IBs are higher than CBs. In Bangladesh there are 62 commercial banks included 8 Islamic Banks that are regulated by Bangladesh Bank (BB).  

scholarly journals MARKET POWER AND EFFICIENCY OF ISLAMIC BANKING AND CONVENTIONAL BANKING IN INDONESIA

2018 ◽  
Vol 6 (2) ◽  
pp. 131
Author(s):  
Chajar Matari Fath Mala ◽  
Ahmad Rodoni ◽  
Bahrul Yaman
Keyword(s):  
Market Power ◽  
Scale Efficiency ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Economic Community ◽  
Banking Market ◽  
Asean Economic Community ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

ASEAN Economic Community (AEC) of banking industry requires both Islamic and conventional banking to improve their efficiency because the competition in banking market industry will be more intense. Therefore, this study aims to identify the type of hyphotesis of industrial organization which exists in Islamic and conventional banks in order to investigate their readiness for AEC. The research sampling consists of 10 Islamic banks and 10 conventional banks from January 2009 to December 2016. To measure x-efficiency and scale efficiency, this research uses Data Envelopment Analysis (DEA). Meanwhile, the concentration is measured by Lerner index. The hypothesis is tested by using panel regression. The result shows SCP (Structure-Conduct-Performance) hypothesis is closely applied to Islamic and conventional banks because market concentration significantly influences profitability. RMP (Relative Market Power) hypothesis is also closely applied to Islamic and conventional banking, this indicates Indonesian banking has market power in determining prices and this condition makes the profit higher. RES (Relative Efficiency Structure) and SES (Scale Efficiency Structure) hypothesis do not exist in both conventional and Islamic banks because x-efficiency and scale efficiency do not affect profitability, concentration, and  market share simultaneously. Market power and efficiency researches are commonly conducted in conventional banking, however there are only a few research in Islamic banking area. The novelty of this study is the comparison between conventional and Islamic banking in the term of market structure and efficiency.

Off-Balance Sheet Income Activities For Islamic And Conventional Banks

2015 ◽  
Vol 3 (3) ◽  
pp. 58
Author(s):  
Latifah Syaqirah Misni ◽  
Masturah Ma'in ◽  
Siti Sarah Mat Isa
Keyword(s):  
Panel Data ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Balance Sheet ◽  
Islamic Banks ◽  
Macroeconomic Factors ◽  
The Real ◽  
Independent Variables ◽  
Real Gross Domestic Product ◽  
Conventional Banks

The aim of this study is to investigate the determinants of off-balanced sheet income activities, considering the bankspecific and macroeconomic factors as independent variables in Islamic and conventional banks in Malaysia. This study utilizes 16 Islamic banks and 14 conventonal banks panel data from 2008-2013 and 2002-2013 respectively. The result shows that the determinants of off-balance sheet activities in Islamic banks in Malaysia are bank’s size (TA), bank’s profitability (NP), and interest rate (INT). While, the determinants of off-balance sheet activities in conventional banks are bank’s size (TA), bank’s profitability (NP) and the Real Gross Domestic Product (RGDP). 

scholarly journals THE EFFICIENCY OF BANKS IN INDONESIA: SHARIA VS. CONVENTIONAL BANKS

2016 ◽  
Vol 18 (3) ◽  
pp. 307-332
Author(s):  
Mokhamad Anwar
Keyword(s):  
Data Envelopment Analysis ◽  
Technical Efficiency ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Bank Capital ◽  
Tobit Regression ◽  
Small Business Finance ◽  
Conventional Banks

This paper evaluates the performance of Indonesian banking sector, focusing on technical efficiency of sharia and conventional banks along with the determinants of its efficiency during the period 2002-2010. Data Envelopment Analysis is employed to estimate banks technical efficiency and Tobit-regression is used to reveal the determinants of the efficiency over the panel data of 116 banks, including 109 conventional banks and 7 sharia banks. The result shows that sharia banks outperformed conventional banks in one model when it takes into account small business finance (SBF) as one of the output components in the model. Sharia banks have higher average SBF portfolio than those of conventional banks’ portfolio. The result indicates the efforts of Indonesian sharia banks to obey one of the principles in Islamic banking, “the emphasis on Islamic principles of morality”. By observing all models, it is concluded that the size of the bank, capital adequacy and liquidity are of banks characteristic factors which are very important to increase banks’ efficiency

scholarly journals The Efficiency of Islamic Banks and Conventional Banks in Indonesia Using Data Envelopment Analysis Approach

2021 ◽  
Vol 58 (1) ◽  
pp. 375-381
Author(s):  
Retno Fitrianti, Sri Undai Nurbayani
Keyword(s):  
Data Envelopment Analysis ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Financial Institution ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Sample Technique ◽  
Using Data ◽  
Conventional Banks

Banking sector mediation is related to efficiency in economic performance. As a financial institution, banks need to maintain their performance in order to operate optimally, one factor that must be considered is efficiency in performance. This research aimed to analyze the efficiency of Islamic Banks and Conventional Commercial Bank in Indonesia. Using a purposive sample technique for two Islamic banks and two commercial banks. Fixed assets, deposits, and other operating expenses as input variablesused, while credit as output variable.  Using Data Envelopment Analysis to calculate the efficiency of banking. The results show that all Sharia Commercial Bank samples reached efficiency level 1 was efficient. Besides, the sample of conventional commercial banks used in this study is not all efficient. This is due to one of the sample banks having an efficiency level below one, which is 0.644. It means that conventional bank groups are inefficient.

scholarly journals COMPARISON OF EFFICIENCY AND MODELLING OF ISLAMIC BANKS AND CONVENTIONAL BANKS IN INDONESIA

2016 ◽  
Vol 4 (2) ◽  
pp. 102 ◽  
Author(s):  
Ar Royyan Ramly
Keyword(s):  
Third Party ◽  
P Value ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Input And Output ◽  
Significant Difference ◽  
Input Variables ◽  
Efficiency Comparison ◽  
Conventional Banks

This study aims to analyze the efficiency comparison between Islamic banks and conventional banks in Indonesia in 2012-2014. The data in this study were chosen through purposive sampling from 20 Islamic banks and conventional banks in Indonesia. The method used in this study is non-parametric approach with data envelopment analysis (DEA) whereas input and output variables are treated in intermediary function. The input variables are total asset, total saving (third party fund), and price of labor while the output variables are total financing (loans) and total operational expenses. To measure the efficiency level of Islamic banks and conventional banks the independent sample t test is used.The result of the study shows that there is no significant difference of efficiency between Islamic banking and conventional banking in 2014 because of the significant value (2-tailed) only at 0.537 where P-value is higher than α=0.05 Ha is refused. There is no difference of efficiency between Islamic banks and conventional banks in efficiency scale (ES). The empirical factors that affect Islamic banks and Conventional banks efficiency are ROA, CAR, and FDR variables. On the other hand, NPF results insignificantly and affects negatively towards Islamic banks efficiency. Lastly, ROA, NPL, LDR, and CAR had significantly affected Conventional banks efficiency in Indonesia from 2012 to 2014.

Conventional versus Islamic bank efficiency: A dynamic network data-envelopment-analysis approach

2020 ◽  
pp. 1-13
Author(s):  
Md Abul Kalam Azad ◽  
Muzalwana Binti Abdul Talib ◽  
Kwek Kian Teng ◽  
Paolo Saona
Keyword(s):  
Data Envelopment Analysis ◽  
Dynamic Network ◽  
Policy Implications ◽  
Network Data ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Network Dea ◽  
Dea Model ◽  
Network Data Envelopment Analysis ◽  
Conventional Banks

This study compares the efficiency of conventional and Islamic banks in Malaysia by engaging in a dynamic three-step (production, intermediation, and profitability) network data envelopment analysis (DEA). The inputs and outputs for the DEA model are selected based on the CAMELS rating. The major contributions of this study are threefold. First, this study investigates the efficiency of Malaysian banks using a novel dynamic network DEA model. Second, the Malaysian banking industry is found to be efficient in creating earning assets rather than in creating loans or profit. The results reveal that only a few banks in Malaysia have been efficient in converting deposits and equities into profit. Third, Islamic banks, in general, have been performing efficiently in the production and profitability approaches. Conventional banks, in contrast, are found to have been efficient in the intermediation approach. Policy implications are derived from the main conclusions.

scholarly journals THE PRE-MERGER EFFICIENCY OF BANKS: EVIDENCE IN INDONESIA STATE-OWNED ISLAMIC BANKS

2021 ◽  
Vol 7 (1) ◽  
pp. 1
Author(s):  
Atika Ayuning Tyas ◽  
Aam Slamet Rusydiana
Keyword(s):  
Efficiency Score ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
High Productivity ◽  
Efficient Performance ◽  
Banking Market ◽  
Dea Method ◽  
Conventional Banks ◽  
Analysis Models

In an effort to improve the development of the sharia economy in Indonesia, the Ministry of State-Owned Enterprises (BUMN) has decided to carry out a merger of BRI Syariah, Bank Syariah Mandiri, and BNI Syariah becomes Bank Syariah Indonesia. This merger plan is implemented to increase the share of the Islamic banking market so that it can compete with conventional banking. In order to be able to compete with conventional banking, Islamic banks must be able to have efficient performance and high productivity. This research is a quantitative study to analyze and compare the performance efficiency of BRISyariah, Bank Syariah Mandiri, and BNISyariah with the performance efficiency of ten conventional banks for the 2016-2019 periods using the Data Envelopment Analysis (DEA) method with five analysis models to obtain various considerations in preparing the merger plan. The estimation results show that if the three Islamic banks are merged, they will have inefficient performance with an efficiency score of 0.86. On the other hand, if only two Islamic banks are merged, namely BNISyariah and BRISyariah, it will produce perfect efficiency values.

Sign in / Sign up

Export Citation Format

Share Document