Measuring Efficiency of Islamic and Conventional Banks in MENA Region

2016 ◽  
Vol 5 (1) ◽  
pp. 29-51
Author(s):  
Asma Sghaier ◽  
Mahmoud Sabra ◽  
Zouhayer Mighr ◽  
Philippe Gilles
Keyword(s):  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Banking System ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Mena Region ◽  
Technical Inefficiency ◽  
Frontier Analysis ◽  
Measuring Efficiency ◽  
Conventional Banks

This study aims to measure the performance and efficiency of Islamic and conventional banks in the MENA region and its determinants. The authors use for this purpose the Data Envelopment Analysis (DEA) method and the analysis of the Stochastic Frontier Analysis (SFA) method for calculating the technical efficiency scores. The results reveal similar trends for both types of performance measurement. The banks category analysis revealed that conventional banks are more efficient than Islamic banks. Despite technological changes experienced by the banking system in the MENA region, the efficiency analysis shows that the technical inefficiency results from the pure technical inefficiency. Finally, the effectiveness of banks in the MENA region is sensitive to variables such as the crisis, deposits, capitalization and including especially variables related to business lines.

HOW LARGE ARE PRODUCTIVITY DIFFERENCES BETWEEN ISLAMIC AND CONVENTIONAL BANKS?

2019 ◽  
pp. 1-20
Author(s):  
WAHIDA AHMAD ◽  
DAVID PRENTICE
Keyword(s):  
Productivity Growth ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Production Functions ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Frontier Analysis ◽  
The Difference ◽  
Conventional Banks

Despite the enormous growth in Islamic banking, most studies, using DEA/Stochastic Frontier Analysis, find Islamic banks are either equally or less productive than conventional banks. We apply the Olley–Pakes (OP) and Ackerberg–Caves–Frazer (ACF) approaches for estimating the production functions of conventional, Islamic and mixed banks in Bahrain and Malaysia between 1990 and 2011. The ACF results are the most plausible. Though Islamic banks tend to be less efficient than conventional banks the difference is not statistically significant. In Malaysia, mixed banks are significantly more productive than other banks and tend to have faster productivity growth.

Banks’ stability-efficiency within dual banking system: a stochastic frontier analysis

2015 ◽  
Vol 8 (4) ◽  
pp. 472-490 ◽  
Author(s):  
Salma Louati ◽  
Younes Boujelbene
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Banking System ◽  
Content Type ◽  
Frontier Analysis ◽  
Explanatory Variables ◽  
Banking Stability ◽  
Conventional Banks

Purpose – The purpose of this paper is to examine and compare the market power and the efficiency-stability of Islamic and conventional banks in the MENA zone and South East Asia during the 2005-2012 period. Design/methodology/approach – The author applied an empirical approach in two steps. First, the author estimates the Lerner indicator, which is a measure of competition. Then, this measure is regressed and other explanatory variables on the banking “stability-efficiency” are derived simultaneously from the estimation of a stability stochastic frontier. Findings – The author concludes that increased competition in the Islamic banking sector promotes the overall banking stability. Besides, whether there is a low or high competitiveness, the size of an Islamic bank is positively related to financial stability. However, large conventional banks operating in market with limited competitiveness become more involved in the risk behavior. The author concludes that capitalization has a positive effect on stability only in case of low competitiveness. Originality/value – The originality of this research lies in the application of the stochastic frontier approach (SFA) on the Z-score indicator. This methodology enables to take into account the differences between the current and the optimum stability that each bank can achieve, thus creating a new measure of financial stability called “efficiency-stability”.

A Stochastic Frontier Analysis of Exporting Small and Medium Sized Enterprises in India

2016 ◽  
Vol 7 (3) ◽  
pp. 1-23
Author(s):  
Manoj Kumar
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Returns To Scale ◽  
Key Factors ◽  
Technical Inefficiency ◽  
Frontier Analysis ◽  
Efficiency Performance ◽  
Size Firm ◽  
Almost All

This study employs a stochastic frontier analysis (SFA) and technical inefficiency effects model to predict the technical efficiency of 3,168 Indian manufacturing and exporting SMEs, analyze their returns to scale and key factors impacting on their technical efficiency. Indian manufacturing and exporting SMEs extensively rely on labor rather than capital to increase their output, including almost all exporting SME groups, except those exporting to North & South America. The production of Indian manufacturing SMEs exporting to Oceania, however, has increasing returns to scale (1.1965). The inefficiency effects model reveals that firm size, firm age, foreign ownership, location and government assistance are firm-specific factors that significantly affect the technical inefficiency of production. Finally, evidence-based policies are also provided to facilitate improvement in the technical efficiency performance of Indian manufacturing and exporting SMEs.

scholarly journals Labour efficiency in construction industry in Europe based on frontier methods: data envelopment analysis and stochastic frontier analysis

2017 ◽  
Vol 23 (6) ◽  
pp. 787-795 ◽  
Author(s):  
Joanicjusz NAZARKO ◽  
Ewa CHODAKOWSKA
Keyword(s):  
Data Envelopment Analysis ◽  
Construction Industry ◽  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Efficiency Analysis ◽  
European Countries ◽  
Personnel Cost ◽  
Data Envelopment ◽  
Frontier Analysis

The primary problems pertaining to productivity or – more precisely – efficiency are: how to define it and how to measure it. This article studies technical efficiency in Stochastic Frontier Analysis (SFA) – the input-oriented frontier model – in the construction industry and compares it with Data Envelopment Analysis (DEA) results. The models ex­plored in this paper were constructed on the basis of two outputs and personnel cost as an input. The research sample consisted of European countries. The aim was to determine whether there are substantial differences in estimation of ef­ficiency derived from those two alternative frontier approaches. The comparison of results according to the models may translate into higher reliability of the undertaken labour efficiency analysis in construction and its conclusions. Although the results are not characterized by high compatibility, the conducted analysis indicated the most attractive countries taking into account labour cost to profit and turnover ratios of enterprises. One of the determinants which should not be ignored when analysing the labour efficiency is the level of development of a country; however, it is not the sole factor affecting the efficiency of the sector.

scholarly journals The Cost Efficiency of the Brazilian Electricity Distribution Utilities: A Comparison of Bayesian SFA and DEA Models

2010 ◽  
Vol 2010 ◽  
pp. 1-20 ◽  
Author(s):  
Marcus Vinicius Pereira de Souza ◽  
Madiagne Diallo ◽  
Reinaldo Castro Souza ◽  
Tara Keshar Nanda Baidya
Keyword(s):  
Cost Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Fundamental Aspect ◽  
Data Envelopment ◽  
Electricity Distribution ◽  
Frontier Analysis ◽  
Dea Models ◽  
The Cost ◽  
Analysis Models

The purpose of this study is to evaluate the efficiency indices for 60 Brazilian electricity distribution utilities. These scores are obtained by DEA (Data Envelopment Analysis) and Bayesian Stochastic Frontier Analysis models, two techniques that can reduce the information asymmetry and improve the regulator's skill to compare the performance of the utilities, a fundamental aspect in incentive regulation schemes. In addition, this paper also addresses the problem of identifying outliers and influential observations in deterministic nonparametric DEA models.

Sign in / Sign up

Export Citation Format

Share Document