Analysis of Comparative Efficiencies of Islamic Banks Across Nine South and Southeast Asian Countries.

The purpose of this paper is two folds: (i) obtain the overall technical efficiencies (TE), pure technical efficiencies (PTE), and scale efficiencies of the Islamic bank of the nine South and Southeast Asian (SSEA) countries during 2011-2016. (ii) compare them among the Islamic banks of the SSEA. The paper applied the Bootstrap Data Envelope Analysis (DEA) for obtaining three efficiencies in the production of loan and earning assets and found that the average TE, PTE, and SE of the Islamic banks in the region were 77.3 percent, 81.2 percent, and 95.3 percent respectively. The comparison of PTE efficiencies across the Islamic banks found: (i) the average TE of the Islamic banks of Malaysia was 81.9 percent and was higher than the average of other countries in the region; (ii) the average managerial efficiency (PTE) of the Islamic banks of Malaysia, excluding Brunei, Singapore, and Thailand, was 87.0 percent and was higher than the average of other countries in the region; (iii) among countries of the South and Southeast Asia, excluding Singapore and Maldives, the Islamic banks of Pakistan were more scale efficient than other countries in the region. The average scale efficiency of Pakistan’s Islamic banks was 96.8 percent. The underlying reason for the Islamic banks of Malaysia and Pakistan most efficient in the region is because they were the forerunners. They were the first countries to introduce Islamic banks. Secondly, the banks of counties survived through competition with conventional banks operating side by side in the Islamic banks. The policy prescription suggests that bank regulators allow the opening of more Islamic banks to compete with conventional banks for improving PTE efficiency.

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Assessing the domestic and foreign Islamic banks efficiency: Insights from selected Southeast Asian countries

Future Business Journal ◽

10.1016/j.fbj.2017.01.005 ◽

2017 ◽

Vol 3 (1) ◽

pp. 33-46 ◽

Cited By ~ 5

Author(s):

Fakarudin Kamarudin ◽

Fadzlan Sufian ◽

Foong Wei Loong ◽

Nazratul Aina Mohamad Anwar

Keyword(s):

Southeast Asian ◽

Islamic Banks ◽

Asian Countries ◽

Southeast Asian Countries

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Islamic Banks and Financial Stability: A Comparative Empirical Analysis between MENA and Southeast Asian Countries

SSRN Electronic Journal ◽

10.2139/ssrn.2010126 ◽

2012 ◽

Cited By ~ 5

Author(s):

Wassim Rajhi

Keyword(s):

Empirical Analysis ◽

Financial Stability ◽

Southeast Asian ◽

Islamic Banks ◽

Asian Countries ◽

Southeast Asian Countries

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Is corporate governance different for Islamic banks? A comparative analysis between the Gulf Cooperation Council and Southeast Asian countries

International Journal of Business Governance and Ethics ◽

10.1504/ijbge.2014.062769 ◽

2014 ◽

Vol 9 (1) ◽

pp. 27 ◽

Cited By ~ 16

Author(s):

Rihab Grassa ◽

Hamadi Matoussi

Keyword(s):

Corporate Governance ◽

Comparative Analysis ◽

Gulf Cooperation Council ◽

Southeast Asian ◽

Islamic Banks ◽

Asian Countries ◽

Southeast Asian Countries

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Determinants of revenue efficiency of Islamic banks

International Journal of Islamic and Middle Eastern Finance and Management ◽

10.1108/imefm-12-2012-0114 ◽

2015 ◽

Vol 8 (1) ◽

pp. 36-63 ◽

Cited By ~ 13

Author(s):

Fadzlan Sufian ◽

Fakarudin Kamarudin

Keyword(s):

Southeast Asian ◽

Least Square ◽

Malmquist Productivity Index ◽

Productivity Index ◽

Islamic Banks ◽

Asian Countries ◽

Profit Efficiency ◽

Content Type ◽

Revenue Efficiency ◽

Southeast Asian Countries

Purpose – The purpose of this paper is to examine the revenue efficiency of Islamic banks in the Southeast Asian countries. Specifically, the empirical analysis comprises Islamic banks operating in Malaysia, Indonesia and Brunei. This paper also seeks to investigate the potential internal (bank-specific) and external (macroeconomic and industry-specific) factors which influence the revenue efficiency of Islamic banks operating in Southeast Asian countries. Design/methodology/approach – This paper used a whole gamut of domestic and foreign Islamic banks operating in Southeast Asian countries, namely, Malaysia, Indonesia and Brunei during the period of 2006-2011. The level of revenue efficiency is computed by using the data envelopment analysis (DEA) method. Following the procedure set in Banker and Natarajan (2008) and Gujarati (2002), this paper use a panel regression analysis framework based on the ordinary least square and generalized least square methods to examine the potential determinants of revenue efficiency of the Islamic banks in the sample. In addition, this paper also use a battery of parametric (t-test) and non-parametric (Mann–Whitney [Wilcoxon] and Kruskall–Wallis) tests to examine the difference in the revenue efficiency of the domestic and foreign Islamic banks. Findings – The results indicate that the level of revenue efficiency on the domestic Islamic banks is higher compared to that of their foreign Islamic bank counterparts. The empirical findings seem to suggest that revenue efficiency has greater influence on the profit efficiency levels. It was found that the bank size, asset quality, capitalization, liquidity and management quality significantly influence the revenue efficiency of domestic Islamic banks operating in Malaysia, Indonesia and Brunei during the period under study. Research limitations/implications – Due to its limitations, the present study may be extended in variety of ways. First, if information on input prices is available, further analysis could be performed to investigate the cost, technical and allocative efficiency. Second, interested researchers may apply the Malmquist Productivity Index method to examine the sources of total factor productivity changes of Islamic banks operating in the ASEAN countries. Third, to obtain more robust results, empirical findings from the present study could be compared to the results derived from improved statistical methods, i.e. Bootstrap DEA. Practical implications – The empirical findings of this paper clearly call for regulators and decision-makers to review the revenue efficiency of banks operating in Malaysia, Indonesia and Brunei Islamic banking sectors. The results could also provide better information and guidance to the managers of Islamic banks, as they need to have a clear understanding on the impact of revenue efficiency on the performance of their banks. The empirical findings of this paper may also have implications for investors whose main focus is to gain higher profit from their investments. Originality/value – The paper is the first to provide empirical evidence on the determinants of revenue, cost and profit efficiency of Islamic banks operating in Southeast Asian countries.

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Does productivity of Islamic banks endure progress or regress?

Humanomics ◽

10.1108/h-08-2016-0059 ◽

2017 ◽

Vol 33 (1) ◽

pp. 84-118 ◽

Cited By ~ 11

Author(s):

Fakarudin Kamarudin ◽

Chiun Zack Hue ◽

Fadzlan Sufian ◽

Nazratul Aina Mohamad Anwar

Keyword(s):

Banking Sector ◽

Southeast Asian ◽

Malmquist Productivity Index ◽

Productivity Index ◽

Islamic Banking ◽

Islamic Banks ◽

Asian Countries ◽

Productivity Level ◽

Content Type ◽

Southeast Asian Countries

Purpose This paper aims to explore the level of productivity of Islamic banks specifically in selected Southeast Asian Countries from the period 2006 to 2014. Besides, this study also investigates the potential determinants of bank-specific characteristics and macroeconomic conditions that may influence the productivity of banking sector. Design/methodology/approach The present study gathers data on the 29 Islamic banks from Southeast Asian countries, namely, Brunei, Indonesia and Malaysia. The productivity level of the Islamic banks is evaluated using the data envelopment analysis-based Malmquist productivity index method. The authors then used a panel regression analysis framework based on the ordinary least square to identify potential determinants. Findings The domestic and foreign Islamic banks have exhibited progress in total factor productivity change solely attributed to the increase in efficiency change (EFFCH) which were mainly managerial rather than scale related. Foreign-owned banks have been slightly more productive compared to their domestic-owned bank counterparts, attributed to a higher EFFCH but insignificantly different. Furthermore, capitalisation, liquidity and world financial crisis determinants have significantly influenced productivity level of Islamic banks. Originality/value The study on the productivity of Islamic banking is still in its formative stage. To date, very limited study has been conducted to examine the productivity level in Southeast Asian, which is a strong regional hub for Islamic banking. This study intends to fill the gaps with a specific focus on the productivity level, specifically narrowing down to Southeast Asian countries in the domestic and foreign Islamic banking sector.

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