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Decomposition of efficiency using DEA window analysis

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submitted on 2024-02-27, 10:51 and posted on 2024-02-27, 10:52 authored by Fekri Ali Shawtari, Milad Abdelnabi Salem, Izzeldin Bakhit

Purpose

The purpose of this paper is to examine empirically the efficiency types of Islamic and conventional banks. It seeks to show whether the efficiency level of conventional and Islamic banks significantly differs from each other. In addition, it investigates the influential factors on each type of efficiency.

Design/methodology/approach

The paper utilises the data envelopment analysis in its windows version to estimate the efficiency scores reflecting the time variance and compares between banking models. The paper uses pure technical efficiency (TE) and scale efficiency to achieve the objective of the study. In addition, the panel data technique is adopted to assess the determinants of the efficiency of the banks econometrically.

Findings

The findings of panel regression initially indicate that the pure TE is higher for conventional banks compared to Islamic banks. However, the Islamic banks are more scale efficient than their conventional counterpart. Macro and micro indicators have different impacts on the both types of efficiency. However, the unique factors that show consistent influence on the efficiency types were loans/finance, non-interest income/finance/liquidity and GDP. Furthermore, the determinants are shaped differently for Islamic and conventional banks when the banking model is controlled for.

Originality/value

This paper examines the efficiency types using a unique window analysis approach to examine the types of efficiency with a longitudinal set of data from 1996 to 2011.

Other Information

Published in: Benchmarking: An International Journal
License: https://creativecommons.org/licenses/by/4.0/
See article on publisher's website: https://dx.doi.org/10.1108/bij-12-2016-0183

Funding

Open Access funding provided by the Qatar National Library.

History

Language

  • English

Publisher

Emerald

Publication Year

  • 2018

License statement

This Item is licensed under the Creative Commons Attribution 4.0 International License

Institution affiliated with

  • Community College of Qatar

Methodology

The paper utilises the data envelopment analysis in its windows version to estimate the efficiency scores reflecting the time variance and compares between banking models. The paper uses pure technical efficiency (TE) and scale efficiency to achieve the objective of the study. In addition, the panel data technique is adopted to assess the determinants of the efficiency of the banks econometrically.

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