The efficiency patterns of Islamic banks during the global financial crisis: The case of Bangladesh

TY - JOUR

T1 - The efficiency patterns of Islamic banks during the global financial crisis

T2 - The case of Bangladesh

AU - Asmild, Mette

AU - Kronborg, Dorte

AU - Mahbub, Tasmina

AU - Matthews, Kent

PY - 2019/11

Y1 - 2019/11

N2 - The Global Financial Crisis (GFC) has refocussed attention on Islamic banking as an alternative business model for banking. Studies of the performance of Islamic banks during the Global Financial Crisis have typically used one-step or two-step methods based on Data Envelopment Analysis (DEA) with mixed results. But such techniques are limited by the inability to identify the nature and structure of the inefficiencies with respect to the improvement potentials on different variables. In this paper we apply Multi-directional Efficiency Analysis (MEA) which facilitates an understanding of the differences in inefficiency patterns for a set of banks in Bangladesh from 2001 to 2015. We confirm the consensus finding that Islamic banks outperformed conventional commercial banks during the GFC period but additionally identify differences in inefficiency from specific variables. Such information can provide important insights to managers and regulators.

AB - The Global Financial Crisis (GFC) has refocussed attention on Islamic banking as an alternative business model for banking. Studies of the performance of Islamic banks during the Global Financial Crisis have typically used one-step or two-step methods based on Data Envelopment Analysis (DEA) with mixed results. But such techniques are limited by the inability to identify the nature and structure of the inefficiencies with respect to the improvement potentials on different variables. In this paper we apply Multi-directional Efficiency Analysis (MEA) which facilitates an understanding of the differences in inefficiency patterns for a set of banks in Bangladesh from 2001 to 2015. We confirm the consensus finding that Islamic banks outperformed conventional commercial banks during the GFC period but additionally identify differences in inefficiency from specific variables. Such information can provide important insights to managers and regulators.

KW - Bangladesh

KW - Islamic banks

KW - Multi-directional Efficiency Analysis (MEA)

U2 - 10.1016/j.qref.2018.04.004

DO - 10.1016/j.qref.2018.04.004

M3 - Journal article

AN - SCOPUS:85046152507

SN - 1062-9769

VL - 74

SP - 67

EP - 74

JO - Quarterly Review of Economics and Finance

JF - Quarterly Review of Economics and Finance

ER -