The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia

In banking sector, evaluation of performance and productivity are among fundamental concepts in management to achieve firm’s goals. High levels of efficiency through performance and continuous efforts of managers are needed in order to be successful in the competitive markets. Institutions need to k...

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Main Author:	Panah, Hadi Ghafoorian Yavar
Format:	Thesis
Language:	English
Published:	2016
Subjects:	HD28 Management Industrial Management
Online Access:	http://eprints.utm.my/id/eprint/78054/1/HadiGhafoorianYavarPFM2016.pdf
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id	my-utm-ep.78054
record_format	uketd_dc
spelling	my-utm-ep.780542018-07-23T06:05:51Z The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia 2016-01 Panah, Hadi Ghafoorian Yavar HD28 Management. Industrial Management In banking sector, evaluation of performance and productivity are among fundamental concepts in management to achieve firm’s goals. High levels of efficiency through performance and continuous efforts of managers are needed in order to be successful in the competitive markets. Institutions need to know their relative success according to performance in comparison with similar institutions and their performance for the past years. In this study, the economic efficiency was analyzed and compared in terms of risk factors for Islamic and conventional banks in Malaysia for the period of 2008 to 2012. The study was conducted on the banks certified by Central Bank of Malaysia (Bank Negara) which includes both Islamic and conventional branches. Data was collected from annual financial reports such as balance sheets and income statements. Data envelopment analysis (DEA) was implemented to determine and analyze the economic efficiency. Based on the intermediation approach, three inputs and two outputs were selected. Basel 2 was used to define the credit and operational risks on efficiency. In addition, DEA network model was proposed to estimate the overall efficiency (with regard to credit and operational risk) of banks and to specify the difference between Islamic and conventional banks in terms of efficiency using the nonparametric test such as Mann-Whitney and Wilcoxon. The result indicates that the credit and operational risk have significant impact on efficiency for both Islamic and conventional banking system. The non-performing loan has negative impact on efficiency in both Islamic and conventional banks which leads to undesirable output of banking system. In contrast, return on equity and return on assets show positive impact on efficiency of banks in Malaysia. The results also reveal that the efficiency of Islamic banks in Malaysia is higher than conventional and the differences are statistically significant. In addition, the efficiency is higher than the overall efficiency (efficiency with regard to credit and operational risk) of banks in Malaysia. The finding also indicates that there is no difference between overall efficiency of Islamic and conventional banks in Malaysia. 2016-01 Thesis http://eprints.utm.my/id/eprint/78054/ http://eprints.utm.my/id/eprint/78054/1/HadiGhafoorianYavarPFM2016.pdf application/pdf en public http://dms.library.utm.my:8080/vital/access/manager/Repository/vital:98224 phd doctoral Universiti Teknologi Malaysia, Faculty of Management Faculty of Management
institution	Universiti Teknologi Malaysia
collection	UTM Institutional Repository
language	English
topic	HD28 Management Industrial Management
spellingShingle	HD28 Management Industrial Management Panah, Hadi Ghafoorian Yavar The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia
description	In banking sector, evaluation of performance and productivity are among fundamental concepts in management to achieve firm’s goals. High levels of efficiency through performance and continuous efforts of managers are needed in order to be successful in the competitive markets. Institutions need to know their relative success according to performance in comparison with similar institutions and their performance for the past years. In this study, the economic efficiency was analyzed and compared in terms of risk factors for Islamic and conventional banks in Malaysia for the period of 2008 to 2012. The study was conducted on the banks certified by Central Bank of Malaysia (Bank Negara) which includes both Islamic and conventional branches. Data was collected from annual financial reports such as balance sheets and income statements. Data envelopment analysis (DEA) was implemented to determine and analyze the economic efficiency. Based on the intermediation approach, three inputs and two outputs were selected. Basel 2 was used to define the credit and operational risks on efficiency. In addition, DEA network model was proposed to estimate the overall efficiency (with regard to credit and operational risk) of banks and to specify the difference between Islamic and conventional banks in terms of efficiency using the nonparametric test such as Mann-Whitney and Wilcoxon. The result indicates that the credit and operational risk have significant impact on efficiency for both Islamic and conventional banking system. The non-performing loan has negative impact on efficiency in both Islamic and conventional banks which leads to undesirable output of banking system. In contrast, return on equity and return on assets show positive impact on efficiency of banks in Malaysia. The results also reveal that the efficiency of Islamic banks in Malaysia is higher than conventional and the differences are statistically significant. In addition, the efficiency is higher than the overall efficiency (efficiency with regard to credit and operational risk) of banks in Malaysia. The finding also indicates that there is no difference between overall efficiency of Islamic and conventional banks in Malaysia.
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Panah, Hadi Ghafoorian Yavar
author_facet	Panah, Hadi Ghafoorian Yavar
author_sort	Panah, Hadi Ghafoorian Yavar
title	The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia
title_short	The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia
title_full	The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia
title_fullStr	The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia
title_full_unstemmed	The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia
title_sort	impact of credit and operational risk on islamic and conventional bank efficiency in malaysia
granting_institution	Universiti Teknologi Malaysia, Faculty of Management
granting_department	Faculty of Management
publishDate	2016
url	http://eprints.utm.my/id/eprint/78054/1/HadiGhafoorianYavarPFM2016.pdf
_version_	1747817895748960256

The impact of credit and operational risk on islamic and conventional bank efficiency in Malaysia

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