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A comparison of performance of Islamic and conventional banks 2004 to 2009

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A comparison of performance of Islamic and conventional banks 2004 to 2009. / Johnes, Jill; Izzeldin, Marwan; Pappas, Vasileios.

Lancaster : Lancaster University, Department of Economics, 2012.

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Johnes J, Izzeldin M, Pappas V. A comparison of performance of Islamic and conventional banks 2004 to 2009. Lancaster: Lancaster University, Department of Economics. 2012 Oct.

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@techreport{fd64645f21674424965954911e9ecff8,
title = "A comparison of performance of Islamic and conventional banks 2004 to 2009",
abstract = "We compare, using data envelopment analysis (DEA), the performance of Islamic and conventional banks prior to, during and immediately after the 2008 financial crisis (2004-2009). There is no significant difference in mean efficiency between conventional and Islamic banks when efficiency is measured relative to a common frontier. A meta-frontier analysis (MFA), new to the banking context, however, reveals some fundamental differences between the two bank categories. In particular, the efficiency frontier for Islamic banks typically lies inside the frontier for conventional banks, suggesting that the Islamic banking system is less efficient than the conventional one. Managers of Islamic banks, however, make up for this as mean efficiency in Islamic banks is higher than in conventional banks when efficiency is measured relative to their own bank type frontier. A second-stage analysis demonstrates that the differences between the two banking systems remain even after the banking environment and bank-level characteristics have been taken into account. Our findings will be useful to both policy-makers and managers.",
keywords = "Banking sector, Islamic banking , Efficiency , Data Envelopment Analysis , Meta-frontier analysis",
author = "Jill Johnes and Marwan Izzeldin and Vasileios Pappas",
year = "2012",
month = "10",
language = "English",
publisher = "Lancaster University, Department of Economics",
type = "WorkingPaper",
institution = "Lancaster University, Department of Economics",

}

RIS

TY - UNPB

T1 - A comparison of performance of Islamic and conventional banks 2004 to 2009

AU - Johnes, Jill

AU - Izzeldin, Marwan

AU - Pappas, Vasileios

PY - 2012/10

Y1 - 2012/10

N2 - We compare, using data envelopment analysis (DEA), the performance of Islamic and conventional banks prior to, during and immediately after the 2008 financial crisis (2004-2009). There is no significant difference in mean efficiency between conventional and Islamic banks when efficiency is measured relative to a common frontier. A meta-frontier analysis (MFA), new to the banking context, however, reveals some fundamental differences between the two bank categories. In particular, the efficiency frontier for Islamic banks typically lies inside the frontier for conventional banks, suggesting that the Islamic banking system is less efficient than the conventional one. Managers of Islamic banks, however, make up for this as mean efficiency in Islamic banks is higher than in conventional banks when efficiency is measured relative to their own bank type frontier. A second-stage analysis demonstrates that the differences between the two banking systems remain even after the banking environment and bank-level characteristics have been taken into account. Our findings will be useful to both policy-makers and managers.

AB - We compare, using data envelopment analysis (DEA), the performance of Islamic and conventional banks prior to, during and immediately after the 2008 financial crisis (2004-2009). There is no significant difference in mean efficiency between conventional and Islamic banks when efficiency is measured relative to a common frontier. A meta-frontier analysis (MFA), new to the banking context, however, reveals some fundamental differences between the two bank categories. In particular, the efficiency frontier for Islamic banks typically lies inside the frontier for conventional banks, suggesting that the Islamic banking system is less efficient than the conventional one. Managers of Islamic banks, however, make up for this as mean efficiency in Islamic banks is higher than in conventional banks when efficiency is measured relative to their own bank type frontier. A second-stage analysis demonstrates that the differences between the two banking systems remain even after the banking environment and bank-level characteristics have been taken into account. Our findings will be useful to both policy-makers and managers.

KW - Banking sector

KW - Islamic banking

KW - Efficiency

KW - Data Envelopment Analysis

KW - Meta-frontier analysis

M3 - Working paper

BT - A comparison of performance of Islamic and conventional banks 2004 to 2009

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -