Economic Efficiency and Profitability of Islamic Bank

This thesis investigates various performance measurements of 78 Islamic banks during the period of 1992 to 2009 in term of bank efficiency, bank efficiency determinants, profitability and relationship between bank efficiency determinants and profitability. We compute the bank efficiency of Islamic...

Full description

Saved in:

Bibliographic Details
Main Author:	Mohamad Akbar Noor, Mohamad Noor
Format:	Thesis
Language:	eng
Published:	2011
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/3490/1/s91877.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.3490
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng
advisor	Ahmad, Nor Hayati
topic	HG Finance
spellingShingle	HG Finance Mohamad Akbar Noor, Mohamad Noor Economic Efficiency and Profitability of Islamic Bank
description	This thesis investigates various performance measurements of 78 Islamic banks during the period of 1992 to 2009 in term of bank efficiency, bank efficiency determinants, profitability and relationship between bank efficiency determinants and profitability. We compute the bank efficiency of Islamic banks by using the non-parametric Data Envelopment Analysis (DEA) method. Our findings show that during the period of study, pure technical efficiency outweighs scale efficiency in Islamic banking countries. Then we examine the Determinants of Islamic Banks’ Efficiency on the second stage based on DEA output in the first stage, a multivariate analysis based on the Tobit model, exploring the proximate sources of (in) efficiency under the multivariate framework and relating the findings to bank specific characteristics. We also incorporate macroeconomic variables as control variables to test the effect of external factors on Islamic bank efficiency determinants and profitability. The findings of bank efficiency determinants reinforces DEA findings with technical efficiency has a positive relationship and statistical significance at 1% level on all 10 models. We then test the profitability of Islamic banks; the profit efficiency estimated the Islamic bank by using the least square method of Fixed Effects Model (FEM) to control bank-specific effects. The empirical results show novel finding that Islamic banks profitability does not have an impact during Asia and Global Financial Crisis. While for Middle East and North Africa (MENA) and Asian also negative with Asian being statistically significant at 10% level implying that Islamic banks operated at Asian are less profitable compared to Islamic bank at MENA. For country income level, the findings stated that Islamic banks operating from MEDIUM Income countries have negative relationship with profitability and statistical significance at 1% level while HIGH income countries have positive relationship and statistical significance at 10% level. This is interesting since MEDIUM & HIGH income countries have different result findings between one and another. We then test the relationship between bank efficiency determinants and profitability. Favourable economic conditions and inclination towards Islamic banking may have fuelled higher demands for Islamic banking products and services that reduce default loan probabilities, thus resulting in profitability. We also find positive correlation between bank profitability and technical efficiency levels, indicating that the more efficient banks tend to be more profitable.
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Mohamad Akbar Noor, Mohamad Noor
author_facet	Mohamad Akbar Noor, Mohamad Noor
author_sort	Mohamad Akbar Noor, Mohamad Noor
title	Economic Efficiency and Profitability of Islamic Bank
title_short	Economic Efficiency and Profitability of Islamic Bank
title_full	Economic Efficiency and Profitability of Islamic Bank
title_fullStr	Economic Efficiency and Profitability of Islamic Bank
title_full_unstemmed	Economic Efficiency and Profitability of Islamic Bank
title_sort	economic efficiency and profitability of islamic bank
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2011
url	https://etd.uum.edu.my/3490/1/s91877.pdf
_version_	1747827584906821632
spelling	my-uum-etd.34902016-04-19T02:31:20Z Economic Efficiency and Profitability of Islamic Bank 2011 Mohamad Akbar Noor, Mohamad Noor Ahmad, Nor Hayati Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance This thesis investigates various performance measurements of 78 Islamic banks during the period of 1992 to 2009 in term of bank efficiency, bank efficiency determinants, profitability and relationship between bank efficiency determinants and profitability. We compute the bank efficiency of Islamic banks by using the non-parametric Data Envelopment Analysis (DEA) method. Our findings show that during the period of study, pure technical efficiency outweighs scale efficiency in Islamic banking countries. Then we examine the Determinants of Islamic Banks’ Efficiency on the second stage based on DEA output in the first stage, a multivariate analysis based on the Tobit model, exploring the proximate sources of (in) efficiency under the multivariate framework and relating the findings to bank specific characteristics. We also incorporate macroeconomic variables as control variables to test the effect of external factors on Islamic bank efficiency determinants and profitability. The findings of bank efficiency determinants reinforces DEA findings with technical efficiency has a positive relationship and statistical significance at 1% level on all 10 models. We then test the profitability of Islamic banks; the profit efficiency estimated the Islamic bank by using the least square method of Fixed Effects Model (FEM) to control bank-specific effects. The empirical results show novel finding that Islamic banks profitability does not have an impact during Asia and Global Financial Crisis. While for Middle East and North Africa (MENA) and Asian also negative with Asian being statistically significant at 10% level implying that Islamic banks operated at Asian are less profitable compared to Islamic bank at MENA. For country income level, the findings stated that Islamic banks operating from MEDIUM Income countries have negative relationship with profitability and statistical significance at 1% level while HIGH income countries have positive relationship and statistical significance at 10% level. This is interesting since MEDIUM & HIGH income countries have different result findings between one and another. We then test the relationship between bank efficiency determinants and profitability. Favourable economic conditions and inclination towards Islamic banking may have fuelled higher demands for Islamic banking products and services that reduce default loan probabilities, thus resulting in profitability. We also find positive correlation between bank profitability and technical efficiency levels, indicating that the more efficient banks tend to be more profitable. 2011 Thesis https://etd.uum.edu.my/3490/ https://etd.uum.edu.my/3490/1/s91877.pdf text eng validuser Ph.D. doctoral Universiti Utara Malaysia Aggarwal, R., and Yousef, T. (2000). Islamic banks and investment financing. Journal of Money, Credit, and Banking, 32 (1), 93-120. Ahmad, N.H., Noor, M.A.N.M., and Sufian, F. (2010). The efficiency of Islamic banks: empirical evidence from the Asian countries Islamic banking sectors. J. International Business and Entrepreneurship Development, 5(2), 154–166. Ahmed, K. (1981), Studies in Islamic Economics, UK.: Islamic Foundation. Akhavein, J., Berger, A.N., and Humphrey, D.B. (1997). The effects of megamergers on efficiency and prices: evidence from a bank profit function. Review of Industrial Organization, 12(1), 95–139. Akhigbe, A., and McNulty, J.E. (2005). Profit Efficiency Sources and Differences among Small and Large U.S. Commercial Banks. Journal of Economics and Finance, 29(3), 289-299. Akhter, S., and Daly, K. (2009). Bank health in varying macroeconomic conditions: A panel study. International Review of Financial Analysis, 18, 285–293. Al-Quran (2011). The Holy Quran Translation Website. http://www.qurantoday.com (accessed on 10.03.2011). Albertazzi, U., and Gambacorta, L. (2009). Bank profitability and the business cycle. Journal of Financial Stability, 5, 393–409. Allen, F., and Santomero, A.M. (1998). The theory of Financial Intermediation. Journal of Banking and Finance, 21, 1461-1485. Amemiya, T. (1973). Regression analysis when the dependent variable is truncated normal. Econometrica, 41(6), 997-1016. Amemiya, T. (1984). Tobit models: A survey. Journal of Econometrics, 24 (1-2): 3-61. Amemiya, T. (1985). Advanced Econometrics. Oxford: Basil Blackwell, ISBN 0631133453. Angbazo, L. (1997). Commercial bank net interest margins, default risk, interest rate risk, and off balance sheet banking. Journal of Banking and Finance, 21, 55–87. Ariff, M. (2006). Islamic banking, a variation of conventional banking. Monash Business Review, 3, 1. Ariff, M., and Can, L. (2008). Cost and profit efficiency of Chinese banks: A nonparametric analysis. China Economic Review, 19, 260–273. Ariss, R.T. (2007). On the Rise of Islamic Banking Among Giant Commercial Banks: A Performance and Efficiency Analysis. Journal of International Business & Economics, 1. Ataullah, A., and Le, H., (2006). Economic reforms and bank efficiency in developing countries: the case of the Indian banking industry. Applied Finance Economics, 16, 653–663. Athanasoglou, P.P., Brissimis, N.S., Delis, M. D., (2008). Bank-specific, industryspecific and macroeconomic determinants of bank profitability. Journal of international financial Markets, Institutions and Money, 18, 121–136 Avkiran, N.K. (2002). Productivity Analysis in the Service Sector with Data Envelopment Analysis. Camira Aysana, A.F., and Ceyhan, S.P. (2008). What determines the banking sector performance in globalized financial markets? The case of Turkey. Physica, 387, 1593–1602. Ayub, M., (2002). Islamic Banking and Finance: Theory and Practice. State Bank of Pakistan, Karachi, Pakistan. Bader, M. K., Shamsher, M., Ariff, M., and Taufiq, H. (2007) . Cost, Revenue and Profit Efficiency of Islamic Versus Conventional Banks: International Evidence Using Financial Ratios Approach, paper submitted to the Special Issue on Performance Analysis of the Islamic Banking and Financial Industry. Review of Islamic Economics, 11(1) Bader, M. K., Shamsher, M., Ariff, M., and Taufiq, H. (2008) . Cost, Revenue and Profit Efficiency of Islamic Versus Conventional Banks: International Evidence Using Data Envelopment Analysis. Islamic Economics Studies, 15 (2). Banker, R.D., Charnes, R.F. and Cooper, W.W. (1984). Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis. Management Science, (30), 1078- 1092. Barr, R.S., Killgo, K.A., Siems, T.F., and Zimmel, S.A. (2002). Evaluating the Productive Efficiency and Performance of U.S. Commercial Banks. Managerial Finance, 28(8), 3-25. Barth, J.R., Caprio, G., Jr., and Levine, R. (2001). The regulation and supervision of bank around the world: A new database. In R.E. Litan, & R. Herring (Eds.), Integrating emerging market countries into the global financial system. Brookings–Wharton papers in financial services (pp. 183–240) . Brooking Institution Press. Bashir, A. (1999),'Risk and Profitability Measures in Islamic Banks: The Case of Two Sudanese Banks’, Islamic Economic Studies, 6(2), 1-24. Batchelor and Wadud (2004). Technical and Scale Efficiency of Islamic Banking Operations in Malaysia: An Empirical Investigation with Longitudinal Perspective. Labuan Bulletin of International Business & Finance, 2(1), 51-69. Bauer, P.W., Berger, A.N., Ferrier, G. D., and Humphrey, D.B. (1998). Consistency Conditions for Regulatory Analysis of Financial Institutions: A Comparison of Frontier Efficiency Methods. Journal of Economics and Business, 50(2) , 85-114. Ben Naceur, S. and Goaied, M. (2008a). The determinants of commercial bank interest margin and profitability: evidence from Tunisia. Frontiers in Finance and Economics, 5(1), 106– 130. Ben Naceur, S., and Omran, M. (2008b). The Effects of Bank Regulations, Competition and Financial Reforms on Mena Banks’ Profitability. Working Paper, Economic Research Forum, Cairo, Egypt. Benston, G.J. (1965). Branch Banking and Economies of Scale. Journal of Finance, 20(2), 312 331. Berg, B.L. (2009). Qualitative research methods for social sciences (7th edition). New York: Pearson. Berg, S. (2010). Water Utility Benchmarking: Measurement, Methodology, and Performance Incentives. International Water Association. Berg, A., and Pattillo, C., (1999). Predicting currency crises: the indicators and an alternative. J. Int. Money Finan, 18, 561–586. Berger, A.N., Hunter, W.C., and Timme, S.G. (1993). The efficiency of financial institutions: a review and preview of research past, present and future. Journal of Banking and Finance, 17, 221–249. Berger, A.N., Kashyap, A.K., and Scalise, J.M. (1995). The Transformation of the U.S. Banking Industry: What a Long, Strange Trip It’s Been. Brookings Papers on Economic Activity, 2, 55-218. Berger, A.N. (1995). The relationship between capital and earnings in banking. Journal Money, Credit and Banking, 27, 432–456. Berger, A.N., and DeYoung, R. (1997). Problem loans and cost efficiency in commercial banks. Journal of Banking & Finance, 21, 849-870, Berger, A.N., and Humphrey, D.B. (1997). Efficiency of Financial Institutions: International Survey and Directions for Future Research. European Journal of Operational Research, 98 (2), 175-212. Berger, A.N., (2007). International comparisons of banking efficiency. Financial Market Institution Instrument, 16, 119–144. Bhuyan, R., and Williams, D.L. (2006).Operating performance of the US commercial banks after IPOs: an empirical evidence . Journal of Commercial Banking and Finance, 5(2), 68–95. Bikker, J., and Hu, H. (2002). Cyclical patterns in profits, provisioning and lending of banks and procyclicality of the new Basel capital requirements. BNL Quarterly Review, 221, 143–175. Bonin, J.P., Hasan, I., and Wachtel, P. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking and Finance, 29, 31–53 Bourke, P. (1989). Concentration and other determinants of bank profitability in Europe, North America and Australia. Journal Banking and Finance, 13, 65–79. Boyd, J., and Runkle, D. (1993). Size and performance of banking firms: testing the predictions theory. Journal of Monetary Economics, 31, 47–67. Brown, M., and Skully, K. (2003). A Cross-Country Analysis of Islamic Bank Performance. Paper presented at the International Banking Conference 2003 “From Money Lender to Banker: Evolutions of Islamic Banking in Relation to Judeo-Christian and Oriental Traditions’, organized by Monash University Malaysia on 9-10 September 2003 Prato, Italy. Bryant, J. (1980). A Model of Reserves, Bank Runs, and Deposit Insurance, Journal of Banking and Finance 4, 335-344 Button, K.J., and Weyman-Jones, T.G. (1992). Ownership Structure, Institutional Organization and Measured X- Efficiency. The American Economic Review 82 (2), 439-445. Casu, B., and Molyneux, P. (2003). A comparative study of efficiency in European banking. Applied Economics, 35(17), 1865−1876. Chapra, M.U. (2000). The Future of Economics: An Islamic Perspective. Leicester: The Islamic Foundation. Charnes, A., Cooper, W., and Rhodes, E. (1978). Measuring the Efficiency of Decision Making Units. European Journal of Operational Research, (2), 429-444 Christensen, R. (2002). Plane Answers to Complex Questions: The Theory of Linear Models (Third ed.). New York: Springer Claessens S., Dermiguc-Kunt, A., and Huizinga, H. (2001). How Does Foreign Presence Affect Domestic Banking Markets?. Journal of Banking and Finance, 25(5), 891-911. Coelli, T. (1996). A Guide to DEAP Version 2.1: A Data Envelopment Analysis (Computer Program), Working Paper, CEPA, University of New England, Armidale. Coelli, T., Rao, D.S.P., and Batesse, G.E. (1998). An Introduction to Efficiency and Productivity Analysis. Boston, MA: Kluwer Academic Publishers. Coelli, T.J., Rao, D.P., O’Donnell, C.J., and Battese, G.E. (2005). An Introduction to Efficiency and Productivity Analysis. Springer. Cooper, W.W., Seiford, L. M., and Tone, K. (2000). Data Envelopment Analysis. Boston: Kluwer Academic Publishers. Dar, H., and J. Presley, (2000). Lack of Profit Loss Sharing in Islamic Banking: Management and Control Imbalances. International Journal of Islamic Financial Services, 2. Darrat, A. and Suliman, O. (1993), “Equity Capital, Profit Sharing Contracts, and Investment: Theory and Evidence”, Journal of Business Finance and Accounting, Vol. 20, No. 5, pp. 639-651. Darrat, A.F., Topuz,C. and Yousef,T., (2002). Assessing cost and technical efficiency of banks in Kuwait. Paper presented in the Economics Research Forum (ERF)’s 8’th annual conference in Cairo, Egypt. Das, A., and Ghosh, S. (2009). Financial deregulation and profit efficiency: A nonparametric analysis of Indian banks. Journal of Economics and Business (61), 509–528 Debreu, G. (1951). The Coefficient of Resource Utilization. Econometrica 19(2), 273-292. Demirguc-Kunt, A., and Huizinga, H. (1999). Determinants of commercial bank interest margins and profitability: some International evidence. World Bank Economic Review, 13, 379– 408. Demirguc-Kunt, A. and Huizinga, H. (2001). Financial structure and bank profitability’, in Demirguc-Kunt, A. and Levine, R. (Eds.): Financial Structure and Economic Growth: A Cross Country Comparison of Banks, Markets and Development . MIT Press, Cambridge, MA, 243–262. DeYoung, R., and Hasan, I. (1998). The Performance of De Novo Commercial Banks: A Profit Efficiency Approach. Journal of Banking and Finance, 22(5), 565-587. DeYoung, R., and Rice, T. (2004). Non-interest income and financial performance at US commercial banks. Financial Review, 39(1), 101–127. Diamond, D. W. and P. H. Dybvig, (1983), Bank Runs, Deposit Insurance, and Liquidity, Journal of Political Economy, 91, 401-419. Drake, L., Hall, M.J.B., and Simper, R. (2006). The impact of macroeconomic and regulatory factors on bank efficiency: a non-parametric analysis of Hong Kong’s banking system. Journal of Banking and Finance, 30(5), 1443–1466. Earnhart, D., and Lizal, L. (2006). Effects of ownership and financial performance on corporate environmental performance. Journal of Comparative Economics, 34, 111–129. Eichengreen, B., and Rose, A.K. (1998). Staying afloat when the wind shifts: external factors and emerging market banking crises. NBER Working Paper. Eichengreen, B., and Gibson, H.D. (2001). Greek Banking at the Dawn of the New Millennium. Discussion Paper, Centre of Economic and Policy Research, London, UK. El Gamal, M.A., (2000). A Basic Guide to Contemporary Islamic Banking and Finance. Islamic Society of North America, Plainfield, IN El-Gamal and Inanoglu (2004). Islamic Banking in Turkey: Boon or Bane for the Financial Sector. Proceedings of the Fifth Harvard University Forum on Islamic Finance, Cambridge : Center for Middle Eastern Studies, Harvard University. El Hawary, D., Grais, W., and Iqbal, Z. (2004). Regulating Islamic financial institutions: The nature of the regulated . World Bank Policy Research Working Paper, #3227. Emrouznejad A., Barnett R.P., and Tavares, G. (2008). Evaluation of research in efficiency and productivity: A survey and analysis of the first 30 years of scholarly literature in DEA. Socio-Economic Planning Sciences, 42(3): 151-157. Enami, K., and Mullahy, J. (2008). Tobit at Fifty: A Brief History of Tobin's Remarkable Estimator, of Related Empirical Methods, and of Limited Dependent Variable Econometrics in Health Economics. Working Paper, NBER Working Paper No. 14512. Evanoff. D.D., and Israelvich, P.R. (1991). Productive Efficiency in Banking, Economic Perspectives. Federal Reserve Bank of Chicago (July/August), 11-32. Fama, E.F. (1980). Banking in the theory of Finance. Journal of Monetary Economics, 6, 39-58. Fare, R., and Lovell, C.A.K. (1978).Measuring the technical efficiency of production. The Journal of Economic Theory, 19, 150-162. Farrell, M.J. (1957). The Measurement of Productive Efficiency?. Journal of the Royal Statistical Society, 120, 253-281. Focarelli, D., Panetta, F., and Salleo, C., (2002). Why do banks merge?. Journal Money Credit Banking, 34, 1047–1066. Frankel, J.A., and Rose, A.K. (1996). Currency crashes in emerging markets: empirical indicators. NBER Working Paper. Fried, H.O., Schmidt, S.S., and Yaisawarng, S., (1999). Incorporating the operating environment into a nonparametric measure of technical efficiency. Journal of Productivity Analysis, 12, 249–267. Fries, S., Neven, D., and Seabright, P. (2002). Bank performance in transition economies. Working Paper No. 76, European Bank for Reconstruction and Development Goddard, J., Molyneux, P., and Wilson, J. (2004). Dynamic of growth and profitability in banking. Journal Money, Credit and Banking, 36, 1069–1090. Gospodarowicz, A. (ed.) (2002). Analysis and assessment of banks and their branches. Publisher of the Academy of Economics in Wroclaw, Wroclaw. Griliches, Z., (1957). Hybrid Corn: An Exploration in the Economics of Technological Change, Econometrica, 25(4), 501- 522. Greene, W. H., (1990). A Gamma-Distributed Stochastic Frontier Model, Journal of Econometrics 13: 141-163. Gropper, D.M., and Oswald, S.L. (1996). Regulation, deregulation and managerial behaviour: new evidence on expense preference in banking. Applied Financial Economics, 6, 1-7 Guru, B.K., Staunton, J., and Balashanmugam, B. (2002). Determinants of Commercial Bank Profitability in Malaysia. Multimedia University Working Paper, Cyberjaya, Malaysia. Hadith (2011). Complete Hadith collection of Sahih Bukhari, Muslim, Malik and Abu Dawud. http://www.quranexplorer.com/ Hadith/English/Index.html (acessed 10.03.2011) Hassan, M. Kabir (1999), Islamic Banking in Theory and Practice: The Experience of Bangladesh, Managerial Finance, 25(5), 60-113. Hassan, M.K., and Bashir, A.H.M. (2003). Determinants of Islamic banking profitability. Paper presented at the 10th ERF Annual Conference, Morocco, 16–18. Hassan, M.K., and Hussein, K.A. (2003). Static and Dynamic Efficiency in the Sudanese Banking System. Review of Islamic Economics, 14, 5-48. Hassan, M.K. (2005). The Cost, Profit and X-Efficiency of Islamic Banks. Paper Presented at the 12th ERF Annual Conference, 19th-21st December, Egypt. Hassan O.A.G., Romilly P., Giorgioni G. and Power D. (2009) , “The value relevance of disclosure: Evidence from the emerging capital market of Egypt”, The International Journal of Accounting, Vol. 44 No.1, pp. 79–102. Hauner, D. (2005). Explaining Efficiency Differences Among Large German and Austrian Banks. Applied Economics, 37(9): 969-980. Hausman, J.A. (1978). Specification Tests in Econometrics. Econometrica, 46 (6), 1251–1271. Havrylchyk, O. (2006). Efficiency of the Polish Banking Industry: Foreign Versus Domestic Banks. Journal of Banking and Finance, 30(7), 1975-1996. Heffernan, S., and Fu, M. (2008). The Determinants of Bank Performance in China. EMG Working Paper Series. Henry, C. M., and Wilson, R. (2004). The Politics of Islamic Finance. Edinburgh: Edinburgh University Press. Hirtle, B.J. and Stiroh, K.J. (2007), The Return to Retail and the Performance of U.S. Banks, Journal of Banking and Finance 31(4), 1101-1133. Ho, M.T., and Tripe, D. (2002). Factors influencing the performance of foreign owned banks in New Zealand. Journal International Financial Markets, Institutions and Money, 12, 341–357. Hsiao, C., (1986) “Analysis of Panel Data, Econometric Society monographs No. 11, New York: Cambridge University Press. Hussein, K.A. (2003). Operational Efficiency in Islamic Banking: The Sudanese Experience. Working Paper No. 1, Islamic Research and Training Institute (IRTI), Islamic Development Bank. Iqbal, M., and Molyneux, P. (2005). Thirty Years of Islamic Banking: History, Performance and Prospects. New York: Palgrave Macmillan. Isik, I., and Hassan, M.K. (2002). Technical, Scale and Allocative Efficiencies of Turkish Banking Industry. Journal of Banking and Finance, 26(4), 719-766. Isik, I. and Hassan, M.K. (2003). Efficiency, Ownership and Market Structure, Corporate Control and Governance in the Turkish Banking Industry. Journal of Business Finance and Accounting, 30(9-10), 1363-1421. Jamasb, T., and Pollitt, M. (2001). Benchmarking and regulation of electricity transmission and distribution utilities: lessons from international experience. Applied Economics Department, Cambridge University, Working Paper No. 2001/1. Kamali, M.H. (1997). Maqasid Al-Shari’ah: the Objectives of Islamic Law, Unpublished Paper presented at the 1st Symposium on Islamic Law and the West, Leicester, UK: The Islamic Foundation. Kaminsky, G.L., and Reinhart, C.M. (1998). Financial crises in Asia and Latin America: then and now. Am. Econ. Rev, 88(2), 444–448. Kaminsky, G.L., Lizondo, S., and Reinhart, C.M. (1998). Leading indicators of currency crises. IMF Staff Papers, 45(1), 1–48. Karim, M.Z.A. (2001). Comparative bank efficiency across select ASEAN countries. ASEAN Economic Bulletin. Karim, M.Z.A., Chan, S.G. and Hassan, S. (2010). Bank Efficiency and Non-Performing Loans: Evidence from Malaysia and Singapore. Prague Economic Papers, 2. Karsen, 1. (1982), Islam and Financial Intermediation, IMF Staff Papers, Vol. 29. Kezdi, G. (2004). Robust Standard Error Estimation In Fixed-Effects Panel Models. Hungarian Statistical Review, 129(3), 20-41. Knight, M. (1999). Developing and Transition Countries Confront Financial Globalization. Finance & Development, a quarterly magazine of IMF, 36(2). Koopmans, T.C. (1951). An Analysis of Production as an Efficient Combination of Activities', in T.C. Koopmans, Ed. , Activity analysis of production and allocation. Cowles Commission for Research in Economics, Monograph No. 13, New York: Wiley. Kopp ,R.J. (1981). The Measurement of Productive Effiency: A Reconsideration. The Quarterly Journals of Economics, 96(3), 477-503. Kosmidou, K., Pasiouras, F., Doumpos, M., Zopounidis, C. (2006) A multivariate analysis of the financial characteristics of foreign and domestic banks in the UK, Omega: The International Journal of Management Science, 34(2), 189-195. Kosmidou, K., Pasiouras, F., and Tsaklanganos, A. (2008). Domestic and multinational determinants of foreign bank profits: the case of Greek banks operating abroad. Journal of Multinational Financial Management, 17, 1–15. Kosmidou, K. (2008). The determinants of banks’ profits in Greece during the period of EU financial integration. Managerial Finance, 34(3), 146–159. Kosmidou, K., and Zopounidis, C. (2008). Measurement of bank performance in Greece. South Eastern Europe Journal Economics, 1, 79–95. Kosmidou, K., Pasiouras, F., and Tsaklanganos, A. (2007a) ‘Domestic and multinational determinants of foreign bank profits: the case of Greek banks operating abroad’, Journal Multinational Financial Management, Vol. 17, pp.1–15. Kosmidou, K., Tanna, S., and Pasiouras, F. (2007b). Determinants of Profitability of Domestic UK Commercial Banks: Panel Evidence from the Period 1995–2002. Working Paper Coventry University, Coventry, UK. Krugman, P. (1999). Currency crises. NBER Conference Report Series. Kuran, T. (2004). Islam and Mammon: The Economic Predicaments of Islamism. New Jersey: Princeton University Press. Kwan, S.H., and Eisenbeis, R. (1995). An Analysis of Inefficiencies in Banking. Journal of Banking and Finance, 19(3-4), 733-734. Kyj, L., and Isik, I., (2008).Bank X-efficiency in Ukraine: an analysis of service characteristics and ownership. Journal Economics and Business, 60, 369–393. Lovell, C.A.L., and Schmidt, P. (1988). A Comparison of Alternative Approaches to the Measurement of Productive Efficiency. Kluwer: Boston. Maudos, J., Pastor, J., Perez, F., and Quesada, J. (2002). Cost and profit efficiency in European banks. Journal of International Financial Markets Institutions and Money, 12, 33−58. McAllister, P.H., and McManus, D.A. (1993). Resolving the Scale Efficiencies Puzzle in Banking. Journal of Banking and Finance, 17(2-3), 389-405. McKinnon, R., (1973).Money and Capital Economic Development . Brookings Institution, Washington, D.C. Metwally, M.M. (1997), “Differences Between the Financial Characteristics of Interest-Free Banks and Conventional Banks.” European Business Review, Vol 97, No 2, pp. 92-98. MIFC. (2010). Methodologies in Shariah Decision-Making. www.mifc.com/index (accessed 05.01.2011). Molyneux, P. (1993). Structure and Performance in European Banking. Mimeo University of Wales Bangor, Bangor, UK. Molyneux, P., and Thornton, J. (1992). Determinants of European bank profitability: a note. Journal Banking and Finance, 16, 1173–1178. Moshirian, F. (2011). The global financial crisis and the evolution of markets, institutions and regulation. Journal of Banking and Finance, 35, 502–511. Muthen, B.O. (1989). Tobit Factor Analysis. British Journal of Mathematical and Statistical Psychology, 42, 241-250. Nazir, M.S., and Nawaz, M.M. (2010). The Determinants of Mutual Fund Growth in Pakistan. International Research Journal of Finance and Economics, 54, 1450-2887. Neely, M., and Wheelock, D. (1997). Why does bank performance vary across states?. Federal Reserve Bank St. Louis Review, March, 27–38. Nicholas, B.A. (1994). Islamic and Western banking: Part 1- Major features, structural forms, comparison with Western banks, Riba. Middle East Executive Reports, 17; 12; 9-14. Noulas, A.G., Ray, S.C., and Miller, S.M. (1990). Returns to Scale and Input Substitution for Large U.S. Banks. Journal of Money, Credit and Banking, 22(1), 94-108. North, D.C. (2000). Foreword. In: Platteau, J-P., Institutions, social norms, and economic development. Harwood: Academic Publishers & Routledge. Olson, D., and, Zoubi, T.A. (2011). Efficiency and Bank Profitability in MENA Countries. Emerging Markets Review. Pasiouras, F. (2007). International Evidence on the Impact of Regulations and Supervision on Banks’ Efficiency: An Application of Two-Stage Data Envelopment Analysis. Review of Quantitative Finance & Accounting. Pasiouras, F. (2008). Estimating the technical and scale efficiency of Greek commercial banks: the impact of credit risk, off balance sheet activities, and international operations. Research International Business Finance, 22(3) , 301–318. Pasiouras, F. (2008b). International evidence on the impact of regulations and supervision on banks' technical efficiency: An application of two-stage data envelopment analysis. Review of Quantitative Finance and Accounting, 30, 187–223. Pasiouras, F., and Kosmidou, K. (2007). Factors influencing the profitability of domestic and foreign commercial banks in the European Union. Research in International Business and Finance, 21, 223–237. Philadelphia. (2011). Philosophy of Islamic banking and finance. http://www.philadelphia.edu.jo/courses/banking/ Files/Banks/b084.pdf (accessed 29.07.2011). Perry, P. (1992). Do banks gain or lose from inflation. Journal Retail Banking, 14(2), 25–40. Pratomo, W.A. dan Ismail, A.G. (2007). Islamic bank performance and capital structure. The Global Journal of Finance and Economics, 4(2): 139-145. Qorchi, M.L. (2005). Islamic Finance Gears Up. Finance and Development Magazine by IMF, 42, 4. Ramanathan, R. (2003). An Introduction to Data Envelopment Analysis: A tool for Performance Measurement. Sage Publishing. Resti, A. (1997). Evaluating the Cost Efficiency of the Italian Banking System: What Can Be Learned from the Joint Application of Parametric and Non-Parametric Techniques. Journal of Banking and Finance, 21(2), 221-250. Sachs, J.A., Tornell, A., and Velaso, A. (1996). Financial crises in emerging markets: the lessons from 1995. NBER Working Paper. Samad, A. (1999). Comparative Efficiency of the Islamic Bank vis-à-vis Conventional Banks in Malaysia. IIUM Journal of Economics and Management, 7(1), 1-25. Samad, A., and Hassan, M.K. (1999). The Performance of Malaysian Islamic Bank during 1984-1997: An Exploratory Study. International Journal of Islamic Financial Services, 1, 3. Sarker, A.A. (2007). Islamic Banking in Bangladesh: Performance, Problems & Prospects. International Journal of Islamic Financial Services,. 1 ,3. Sathye, M. (2001). X-Efficiency in Australian Banking: An Empirical Investigation. Journal of Banking and Finance, 25(3), 613-30. Saunders, A., Strock, E., and Travlos, N.G. (1990). Ownership Structure, Deregulation, and Bank Risk Taking. Journal of Finance, 45 (2), 643-654. Saxonhouse, G.R. (1976). Estimated Parameters as Dependent Variables. American Economic Review, 66 (1), 178-183. Schaik, D.V. (2001). Islamic Banking. The Arab Bank Review, 3, 1. Schnedler, W. (2005). Likelihood estimation for censored random vectors. Econometric Reviews, 24 (2), 195-217. Scholtens, B., and Wensveen, D.J. (2003). The Theory of Financial Intermediation: An Essay On What It Does (Not) Explain. SUERF – The European Money and Finance Forum Vienna 2003. Sealey, C., and Lindley, J.T. (1977). Inputs, Outputs and a Theory of Production and Cost at Depository Financial Institutions. Journal of Finance, 32 (4), 1251-1266. Seiford, L.M., and Thrall, R.M. (1990). Recent Developments in DEA: The Mathematical Programming Approach to Frontier Analysis. Journal of Econometrics, 46, 7-38. Senn, S.J. (1993). Baseline Distribution and Conditional Size. Journal of Biopharmaceutical Statistics, 3: 265-270 (Correction: (1994) Journal of Biopharmaceutical Statistics , 4, 449. Siddiqi, M.N. (2004). Riba, Bank Interest and the Rationale of Its Prohibition. IDB-IRTI, Visiting Scholars’ Research Series, Jeddah. Staikouras, C. and Wood, G. (2003). The Determinants of Bank Profitability in Europe. Paper presented at the European Applied Business Research Conference, Venice, 9-13 June. Staub, R.B., Souza, G.D.S.E., and Tabak, B.M. (2010). Evolution of bank efficiency in Brazil: A DEA approach. European Journal of Operational Research, 202, 204–213. Sufian, F. (2006). Size and Returns to Scale of the Islamic Banking Industry in Malaysia: Foreign Versus Domestic Banks. IIUM Journal of Economics and Management, 14(2),147- 175. Stiroh, K.J. and Rumble, A. (2006), The Dark Side of Diversification: The Case of US Financial Holding Companies , Journal of Banking and Finance 30 (8), 2131-2161. Sufian, F., and Majid, M.Z.A. (2007). Bank Mergers Performance of the Determinants of Singaporean Banks’ Efficiency. Gadjah Mada International Journal of Business Sufian, F., Noor, M.A.M. and Abdul, M.M.Z, (2008) The Efficiency of Islamic Banks: Empirical Evidence from the MENA and Asian Countries Islamic Banking Sectors. The Middle East Business and Economic Review, Vol.20, No.1 Sufian, F., and Noor, M.A.N.M. (2009). The Determinants of Islamic Bank’s Efficiency Changes: Empirical Evidence from the MENA and Asian Countries Islamic Banking Sectors. International Journal of Islamic and Middle Eastern Finance and Management,. 2(2), 120-138. Sufian, F., and Habibullah, M.S. (2009). Bank specific and macroeconomic determinants of bank profitability: empirical evidence from the China banking sector. Frontiers of Economics in China, 4(2), 274–291. Sufian, F., and Habibullah, M.S. (2010). Does Economic Freedom Fosters Banks’ Performance? Panel Evidence from Malaysia. Journal of Contemporary Accounting & Economics, doi: 10.1016/j.jcae.2010.09.003 Sufian, F. (2009). Determinants of bank efficiency during unstable Macroeconomic environment: Empirical evidence from Malaysia. Research in International Business and Finance, (23), 54–77. Sufian, F. (2010). Developments in the performance of the Malaysian banking sector: opportunity cost of regulatory compliance. Int. J. Business Competition and Growth, 1(1), 85–103. Tanner, E. (2000). Exchange market pressure and monetary policy: Asia and Latin America in the 1990s. IMF Staff Papers, 47(3), 311–333. Taylor, W.M., Thompson, R.G., Thrall, R.M., and Dharmapala, P.S. (1997). DEA/AR efficiency and profitability of Mexican banks a total income model. European Journal of Operational Research, 98, 346-363. Thanassoulis, E. (2001). Introduction to the Theory and Application of Data Envelopment Analysis: A Foundation Text with Integrated Software. Boston: Kluwer Academic Publishers Thomas, R.R., Barr, R.S., Cron, W.L., and Slocum, J.W. (1998). A process for evaluating retail store efficiency: a restricted DEA approach. International Journal of Research in Marketing, 15. 487-503. Tobin, J. (1958). Estimation of relationships for limited dependent variables. Econometrica, 26 (1), 24-36. Tofallis, C. (2001). Combining two approaches to efficiency assessment. Journal of the Operational Research Society, 52(11), 1225-1231. Usmani, M.T. (2002). An Introduction to Islamic Finance. Arab and Islamic Law Series. Kluwer Law International, The Hague. Venardos, A.M. (2005). Islamic Banking and Finance in Southeast Asia: Its Development and Future. World Scientific Publishing Company, Singapore. Weill, L. (2003).Banking efficiency in transition economies : The role of foreign ownership. Economics of Transition, 11(3), 569−592. White, H. (1980).A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity, Econometrica, 48: 4, 817-838. White, H. (1984). Asymptotic Theory for Econometricians. Orlando Academic Press. 16. Williams, B. (2003).Domestic and international determinants of bank profits: foreign banks in Australia. Journal of Banking and Finance, 27, 1185–1210. Yeh, C.P., Wanga, K.M., and Chai, K.C. (2010). Measuring the efficiency of securities companies by corporate governance in a financial holding and non-financial holding system. Expert Systems with Applications, 37 ,4671–4679. Zaher, T.S., and Hassan, M.K. (2001). A Comparative Literature Survey of Islamic Finance and Banking. Financial Markets, Institutions & Instrument,s 10(4), 155-199. Zhu, J. (2003). Quantitative models for performance evaluation and benchmarking: Data envelopment analysis with Spreadsheets and DEA Excel Solver. Massachussetts, U.S.A.: Kluwer Academic Publishers.

Economic Efficiency and Profitability of Islamic Bank

Similar Items