The efficiency of Islamic banks in Malaysia: Based on DEA and Malmquist productivity index

2018 ◽  
Vol 6 (3) ◽  
pp. 15
Author(s):  
Mohd Faizal Basri ◽  
Amirul Afif Muhamat ◽  
Mohamad Nizam Jaafar
Keyword(s):  
Technical Efficiency ◽  
Foreign Banks ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Finance House ◽  
The Impact

This paper aims to investigate the impact of liberalisation move by Bank Negara Malaysia (BNM) towards the efficiency of domestic and foreign Islamic banks (IBs) in Malaysia. This is consequence of decision of BNM that awarded licenses to three international IBs, namely Kuwait Finance House (KFH), Al Rajhi Bank, and Asian Finance Bank in 2005. In addition, this study takes into consideration the existing foreign banks in the country that operate via Islamic banking subsidiaries as part of foreign IBs. The research evaluates the impact of foreign Islamic banks in Malaysia by measuring their contribution to the growth of the Malaysian Islamic banking industry. Using a sample of 16 IBs in Malaysia from 2008 to 2015, the study uses Data Envelopment Analysis (DEA) in measuring the efficiency level of each bank and comparative between the performance of domestic and foreign IBs in the country. The paper also employs the Malmquist Productivity Index to gauge the changes in its components between the same subjects and timeframe. The DEA results showed that the domestic Islamic banks are considered more efficient than most domestic Islamic banks outperforming the foreign Islamic banks. Banks like Hong Leong Islamic, Maybank Islamic, Public Islamic, and RHB Islamic are considered among the top performers for technical efficiency and scale efficiency. The study also found that based on the Malmquist Productivity Index, the least efficient banks based on DEA have improved in technical efficiency, technology, and total factor productivity (TFP).

Efficiency of Qatari banking industry: an empirical investigation

2017 ◽  
Vol 35 (2) ◽  
pp. 298-318 ◽  
Author(s):  
Abdul-Hamid Abdul-Wahab ◽  
Razali Haron
Keyword(s):  
Technical Efficiency ◽  
Technological Innovation ◽  
Banking Sector ◽  
Foreign Banks ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Published Data ◽  
Islamic Banks ◽  
Content Type

Purpose The purpose of this paper is to examine the efficiency of the banking sector in Qatar. The paper utilizes 15 banks comprising Islamic, conventional and foreign banks for the duration of 2007 to 2011. Design/methodology/approach Data envelopment analysis (DEA) technique is applied to compute technical efficiency, pure technical efficiency and scale efficiency. Also, Malmquist productivity index (MPI) is used to identify the sources of productive efficiencies of the banks. Findings The results suggest that Qatari banks are operating below optimum performance and thus there is still room for improvement. While conventional banks are the most efficient in Qatar in terms of technical and pure technical efficiencies, Islamic banks are most efficient in terms of scale efficiency. Besides, pure technical inefficiency dominated scale inefficiency in the Qatari banking sector. Moreover, as compared to the Islamic banks, conventional and foreign banks recorded a reduction in average technical efficiency during the duration of the 2008/2009 global financial crisis. In terms of productivity progress, all the Qatari banks were experiencing a decline in productivity mainly attributed to less technological innovation in the banking sector of Qatar. Research limitations/implications Most of the banks in Qatar do not have published data before 2007 and after 2011. Practical implications There is less technological innovation in the banking sector of Qatar. Hence, bank managers in Qatar should focus on educating customers about modern banking technologies and other innovative banking services in Qatar. Originality/value This study is a pioneering effort in the application of DEA and MPI to study about the banking sector in Qatar.

scholarly journals Performance Assessment Based on the Relative Efficiency of Indian Opencast Coal Mines Using Data Envelopment Analysis and Malmquist Productivity Index

Energies ◽  
2020 ◽  
Vol 13 (18) ◽  
pp. 4902
Author(s):  
Biswaranjita Mahapatra ◽  
Chandan Bhar ◽  
Sandeep Mondal
Keyword(s):  
Data Envelopment Analysis ◽  
Technical Efficiency ◽  
Primary Source ◽  
Efficiency Score ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Data Envelopment ◽  
Significant Difference ◽  
Using Data

Coal is the primary source of energy in India. Despite being the second-largest coal-producingcountry, there exists a significant difference in demand and production in India. In this study, the relativeefficiency of twenty-eight selected opencast mines from a large public sector undertaking coal companyin India for 2018–2019 was assessed and ranked by using data envelopment analysis (DEA). This studyused input-oriented DEA with efficiency decomposition to pure technical efficiency, technical efficiency,and scale efficiency. The result showed that 25% and 36% of mines were efficient in technical efficiencyand pure technical efficiency, respectively, whereas the eight mines scale efficiency was inefficient witha decreasing return to scale. Further, in this study, theMalmquist Productivity Index (MPI)was employedto measure the efficiency of the selected mines for three consecutive years (2016–2017 to 2018–2019).The result shows that in only three mines the efficiency is continuously improving from 2016–2017 to2018–2019, whereas in more than 20% of mines the efficiency score is decreasing. Comparing theMPIefficiency and productivity assessment throughout the years, changes in innovation and technology areincreasing from 2017–2018 to 2018–2019. Finally, the study concluded with a comprehensive evaluationof each variable with mines performance. The author formulated the strategies, which in turn help coalprofessionals to improve the efficiency of the mine.

scholarly journals The sources of productivity change and efficiency in Islamic banking: Application of Malmquist productivity index

2017 ◽  
Vol 1 (4) ◽  
pp. 35
Author(s):  
Janet Ganouati ◽  
Hédi Essid
Keyword(s):  
Technological Change ◽  
Design Research ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Productivity Change ◽  
Islamic Banking ◽  
Subprime Crisis ◽  
Islamic Banks ◽  
Production Approach

Aim: This paper aims to explore performance of Islamic banks in 13 countries from the period 2005 to 2014 and investigates sources of productivity change over the time. Design / Research methods: The present study gather data on the 31 Islamic banks. The productivity is examined using the Data Envelopment Analysis-based Malmquist productivity index. That we decompose into scale efficiency, technological change and technical efficiency. Source of productivity change in Islamic banks is then identified. We use intermediation approach and production approach to select inputs and outputs of banks. Conclusions / findings: Although the two approaches are different, our empirical implementation shows that they yield very similar results regarding productivity, efficiency and source of productivity change. Islamic banks are productive and efficient over the study period, but they did not show to be scale efficient and they suffer from technological change evolutions. Moreover, we are able to show that Subprime crisis had a slightly negative effect on productivity in Islamic banking industry. Originality / value of the article: Empirical studies are still rare and findings are controversial on productivity and efficiency of Islamic banks. This study intends to fill the gaps with a specific focus on measuring productivity index using two different intermediation approach and production approach to select input and output variables.Implications of the research (if applicable) – Islamic banks are scale inefficient and must improve size of their activities, one possible suggestion is meagering small banks.Limitations of the research (if applicable) – Further research can use bootstrapping techniques to correct total factor productivity estimates for bias and to assess the uncertainty surrounding such estimates.

scholarly journals Business Efficiency Evaluation of Machine Tool Manufacturers by Data Envelopment Analysis (DEA): A Case Study of Taiwanese Listed Machine Tool Companies

2021 ◽  
Vol 14 (12) ◽  
pp. 111
Author(s):  
Jui-Lung Chen
Keyword(s):  
Data Envelopment Analysis ◽  
Machine Tool ◽  
Technical Efficiency ◽  
Technical Progress ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Business Strategies ◽  
Scale Efficiency ◽  
Data Envelopment ◽  
Business Efficiency

Data envelopment analysis (DEA) is widely used to measure the business efficiency of many industries, among which the Taiwanese machine tool industry is well-known for its complete supply-chain system. Relying on DEA and Malmquist Productivity Index to analyze the business efficiency of Taiwanese listed machine tool manufacturers from 2018 to 2019, this study compared the changes in their business efficiencies and productivities. According to the five change indicators of Malmquist, only the technical efficiency, pure technical efficiency, and scale efficiency of the overall industry posted some growth during the research period, showing that the whole industry is actively improving its technical efficiency and striving to achieve the scale efficiency. However, technical change and total factor productivity declined slightly, indicating that the industry still makes more technical progress. Thus, companies should adjust their inputs and outputs to improve the production boundary for technical progress. The purposes of this study are to identify the success factors of the excellent performance of manufacturers and the benchmarking indicators of the decision-making unit on the efficient frontier results to provide some references for formulating future business strategies and direction.

scholarly journals The Efficiency Performance of Global Islamic Banks

2016 ◽  
Vol 1 (1) ◽  
Author(s):  
Norlina Kadri ◽  
Rossazana Abdul Rahim ◽  
Dyg Siti Zahrah Abg. Abdillah
Keyword(s):  
Data Envelopment Analysis ◽  
Technical Efficiency ◽  
Banking Sector ◽  
Scale Efficiency ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Technical Inefficiency ◽  
Efficiency Performance ◽  
Dea Approach

This paper examines the efficiency performance of the Islamic banks that consist of 14 countries namely Bahrain, Bangladesh, Iran, Jordan, Kuwait, Lebanon, Malaysia, Pakistan, Qatar, Saudi, Tunisia, Turkey, UAE, and Yemen during the period of 2004-2011 with 44 Islamic banks involved. The efficiency estimates of individual banks are evaluated using the Data Envelopment Analysis (DEA) approach. The empirical findings suggest that during the period of study, pure technical efficiency outweighs scale efficiency in the global Islamic banking sector implying that the Islamic banks have been managerially efficient in exploiting their resources to the fullest extent. The empirical findings seem to suggest that the global Islamic banks have exhibited high pure technical efficiency. During the period of study it is found that pure technical efficiency has greater influence in determining the total technical inefficiency of the Global Islamic banking sectors.

scholarly journals Seaport efficiency and productivity based on Data Envelopment Analysis and Malmquist Productivity Index

2015 ◽  
Vol 6 (1) ◽  
pp. 25-33 ◽  
Author(s):  
Joanna Baran ◽  
Aleksandra Górecka
Keyword(s):  
Data Envelopment Analysis ◽  
Technical Efficiency ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Data Envelopment ◽  
Data Set ◽  
Container Ports ◽  
Efficiency Ranking ◽  
Efficiency And Productivity

Abstract Seaport efficiency and productivity are the critical factors for handling of goods in the international supply chains and plays an important role in trade exchange with other countries. It is important to evaluate efficiency and productivity of seaports to reflect their status and reveal their position in competitive environment. The main purpose of this article is to use Data Envelopment Analysis and Malmquist Productivity Index to measure the technical efficiency and total factor productivity of container ports. DEA analysis enables one to assess how efficiently a seaports uses the available inputs to generate a set of outputs relative to other units in the data set. This article presents the use CCR and BCC DEA model, to determine overall technical efficiency, pure technical efficiency and scale efficiency of container ports. The analysis gives a possibility to create a efficiency ranking of seaports. The study also applies the Malmquist Productivity Index (MPI), which was used to analyze changes in seaports productivity. The study indicated that technological progress had a greater impact on the change in productivity of container ports than changes in technical efficiency.

scholarly journals MALAYSIAN ISLAMIC BANKS’ EFFICIENCY: AN INTRA-BANK COMPARATIVE ANALYSIS OF ISLAMIC WINDOWS AND FULL-FLEDGED SUBSIDIARIES

2017 ◽  
Vol 16 (1) ◽  
Author(s):  
Oladipupo Luqman Salami ◽  
Adewale Abideen Adeyemi
Keyword(s):  
Comparative Analysis ◽  
Technical Efficiency ◽  
Empirical Studies ◽  
Financial Service ◽  
Scale Efficiency ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Financial Reports ◽  
Intra Bank

This paper aims to fill an apparent dearth of empirical studies that compare the efficiency of Islamic banks in Malaysia during their operation as Islamic windows and later transformation to full-fledged Islamic banks. Data obtained from the annual financial reports of the sampled banks is analyzed using the Data Envelopment Analysis (DEA) via DEAP 2.1 software to assess both the technical and scale efficiency of the banks under sample. Results obtained indicate that the banks have improved over the years in terms of both scale and technical efficiency although the former takes prominence. In general, the banks were found to be more efficient as Islamic windows compared to being full-fledged subsidiaries. This augurs well for the current disposition where, as per the Islamic Financial Service Act 2013, Islamic banks in Malaysia may now operate as full-fledged banks from their hitherto Islamic banking window status.Keywords: Scale Efficiency; Technical Efficiency; Islamic Window; Full-Fledged Banks.

scholarly journals Business Efficiency Evaluation of Machine Tool Manufacturers by Data Envelopment Analysis (DEA): A Case Study of Taiwanese Listed Machine Tool Companies

2021 ◽  
Vol 14 (12) ◽  
pp. 125
Author(s):  
Jui-Lung Chen
Keyword(s):  
Data Envelopment Analysis ◽  
Machine Tool ◽  
Technical Efficiency ◽  
Technical Progress ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Business Strategies ◽  
Scale Efficiency ◽  
Data Envelopment ◽  
Business Efficiency

Data envelopment analysis (DEA) is widely used to measure the business efficiency of many industries, among which the Taiwanese machine tool industry is well-known for its complete supply-chain system. Relying on DEA and Malmquist Productivity Index to analyze the business efficiency of Taiwanese listed machine tool manufacturers from 2018 to 2019, this study compared the changes in their business efficiencies and productivities. According to the five change indicators of Malmquist, only the technical efficiency, pure technical efficiency, and scale efficiency of the overall industry posted some growth during the research period, showing that the whole industry is actively improving its technical efficiency and striving to achieve the scale efficiency. However, technical change and total factor productivity declined slightly, indicating that the industry still makes more technical progress. Thus, companies should adjust their inputs and outputs to improve the production boundary for technical progress. The purposes of this study are to identify the success factors of the excellent performance of manufacturers and the benchmarking indicators of the decision-making unit on the efficient frontier results to provide some references for formulating future business strategies and direction.

Impact of merger on efficiency and productivity : a case study of commercial banks in Malaysia

1970 ◽  
Vol 5 (1) ◽  
pp. 77
Author(s):  
Mahadzir Ismail ◽  
Saliza Sulaiman ◽  
Hasni Abdul Rahim ◽  
Nordiana Nordin
Keyword(s):  
Efficiency Score ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Data Envelopment ◽  
Master Plan ◽  
Before And After ◽  
Domestic Banks ◽  
The Impact ◽  
Efficiency And Productivity

The Financial Master Plan (2001- 2010) aims to enhance the capacity of banking industry so that higher effic iency and productivity can be reaped in the future. This study seeks to determine the impact of merger on the efficiency and productivity ofcommercial banks in Malaysia for the period 1995 until 2005. The study uses a non-parametric approach, nam ely DEA (data envelopment analysis?) to estimate the efficiency scores and to construct the Malmquist productivity index. To enable this estimation, three bank inputs and outputs are used. Amongst the findings are those banks exhibit higher efficiency score after the merger and thefo reign banks are more efficient than the local banks. Productivity of the banks is calculated in both periods, before and after the merger: The results show that, it is the local banks that have improved the most after the merger. The main source of productivity is technical change or innovation. The findings support the existing policy of having larger domestic banks in term of size.

scholarly journals An Empirical Analysis of Productivity Changes in the Ethiopian Commercial Banks: Using DEA- Based Malmquist Productivity Index Approach

2021 ◽  
Vol 10 (1) ◽  
pp. 48
Author(s):  
Alem Gebremedhin Berhe
Keyword(s):  
Technical Efficiency ◽  
Commercial Banks ◽  
Utilization Efficiency ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Productivity Change ◽  
Productivity Improvement ◽  
Managerial Practices ◽  
Index Approach

The rationale of this paper is to measure the productivity change of commercial banks in Ethiopia based on DEA-based Malmquist productivity index approach. For this purpose, this study employed a balanced panel data of eight commercial banks operating from 2006 to 2017. The result shows that the banks under study were found to have reported a slight productivity progress of 0.4% over the whole study period. The productivity improvement is accredited to the technological progress (0.9%) rather than the efficiency loss (0.5%). Meanwhile, the finding suggests that the decline in the technical efficiency of the banks was caused both by pure technical efficiency and scale efficiency. Alternatively, the finding of the study indicates that the productivity performance of all the banks under study, with the exception of AIB and CBE, remain almost constant in spite of their size during the period. AIB and CBE have exhibit an average productivity progress of 2% and 1.4% respectively during the study period. In the study period, AIB was found to be the most inefficient (2.4%) and the most productive one (2%) comparing to other banks in the study due to retrogress in scale efficiency change (2.1%) as well as technical progress (4.5%) in that order. Further, the paper suggests that the productivity performance of the banks under study was not significantly different in the period. So, the banks have to move forwards their technology to increase productivity more and more, while improving the resource utilization efficiency by up grading their managerial practices and scale operations (optimum size)

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