The Efficiency Patterns of Islamic Banks During the Global Financial Crisis: The Case of Bangladesh

Mette Asmild, Dorte Kronborg, Tasmina Mahbub, Kent Matthews

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

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.
Original languageEnglish
JournalThe Quarterly Review of Economics and Finance
Volume74
Pages (from-to)67-74
Number of pages8
ISSN1062-9769
DOIs
Publication statusPublished - Nov 2019

Bibliographical note

Published online: 12. April 2018

Keywords

  • Islamic banks
  • Multi-directional Efficiency Analysis (MEA)
  • Bangladesh

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