Performance of Islamic and conventional banks: A meta-frontier approach

Mariani Abd Majid, Manizheh Falahaty, Mansor Jusoh

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This study conducts a stochastic frontier analysis and adopts meta-frontier approach towards Malaysian banks' data and finds that conventional banks are more cost efficient than Islamic ones. The primary factors contributing to the differences in efficiency between the two banks are the wide disparity from their respective best banks and technological constraints. While few Islamic banks use technologies that are similar and close to the industry's standard, many others have diverse technologies. The latter can be attributed to differences in organisational structure and operational processes. By contrast, conventional banks are closer in terms of structure and processes to their best bank and adopt technologies that are almost similar to those used in the industry. These findings show that a different treatment is required in terms of the policy, regulations, and management for both bank types, a key implication for policy makers, bank regulators, and industry players.

Original languageEnglish
JournalResearch in International Business and Finance
DOIs
Publication statusAccepted/In press - 2017

Fingerprint

Metafrontier
Industry
Industry standards
Islamic financial institutions
Factors
Politicians
Technology use
Stochastic frontier analysis
Organizational structure
Costs

Keywords

  • Bank efficiency
  • Islamic banks
  • Meta-frontiers

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Finance

Cite this

Performance of Islamic and conventional banks : A meta-frontier approach. / Abd Majid, Mariani; Falahaty, Manizheh; Jusoh, Mansor.

In: Research in International Business and Finance, 2017.

Research output: Contribution to journalArticle

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