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

Azad, Md Abul Kalam and Talib, Muzalwana Binti Abdul and Kwek, Kian-Teng and Saona, Paolo (2021) Conventional versus Islamic bank efficiency: A dynamic network data-envelopment-analysis approach. Journal of Intelligent & Fuzzy Systems, 40 (2). pp. 1921-1933. ISSN 1064-1246, DOI https://doi.org/10.3233/JIFS-189196.

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Abstract

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.

Item Type: Article
Funders: UNSPECIFIED
Uncontrolled Keywords: Data envelopment analysis; Efficiency; Network DEA; Malaysia
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
H Social Sciences > HG Finance > Banking
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 25 Feb 2022 04:09
Last Modified: 25 Feb 2022 04:09
URI: http://eprints.um.edu.my/id/eprint/26394

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