The efficiency of Islamic banks in the Southeast Asia (SEA) region

Chowdhury, Mohammad Abdul Matin and Haron, Razali (2021) The efficiency of Islamic banks in the Southeast Asia (SEA) region. Future Business Journal, 7 (16). pp. 1-16. E-ISSN 2314-7210

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Abstract

The Islamic banking sector has become a crucial part of the global banking industry. Despite the Islamic banking industry’s encouraging growth in the Southeast Asia (SEA) region, prior studies mostly focused on Islamic banks’ efficiency in the individual country. To fill the literature gap, this study aims to measure the efficiency and productivity growth of Islamic banks in the SEA region. This study adopted the DEA technique and the Malmquist productivity index to evaluate 31 Islamic banks’ performance in SEA from 2014 to 2019. The results evidenced an improvement in efficiency and progress in productivity for the banks in the region. The findings documented better efficiency and gradual progress in productivity for Islamic banks in Indonesia, consistent efficiency for Malaysia, a significant improvement for Brunei; hence, both Thailand and the Philippines Islamic bank depicted a drop-in efficiency for 2019. The findings trigger bank managers to acknowledge the inefficiencies and their sources. Investors and policymakers may find the findings useful in observing the banks’ performance; thus, taking effective mechanism and policies to promote competent and sustainable SEA Islamic banks in the long run.

Item Type:	Article (Journal)
Additional Information:	4581/89668
Uncontrolled Keywords:	Efficiency, Islamic banking efficiency, Total factor productivity (TFP), Islamic Banks’ performance, DEA, The Malmquist productivity index, SEA Islamic banks
Subjects:	H Social Sciences > HG Finance > HG1501 Banking
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF) Kulliyyah of Economics and Management Sciences Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr. Razali Haron
Date Deposited:	04 May 2021 11:10
Last Modified:	04 May 2021 11:10
URI:	http://irep.iium.edu.my/id/eprint/89668

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