Title: On the relative efficiency of conventional and Islamic banks: a DEA-window approach

Authors: Rami Zeitun; Khalid S. Abdulqader; Khaled A. Alshare

Addresses: College of Business and Economic, Qatar University, P.O. Box 2713, Doha, Qatar ' College of Business and Economic, Qatar University, P.O. Box 2713, Doha, Qatar ' College of Business and Economic, Qatar University, P.O. Box 2713, Doha, Qatar

Abstract: This paper explores the relative efficiency of 65 conventional and Islamic banks in the Gulf Cooperation Council (GCC) region using the Data Envelopment Analysis (DEA) over the period from 2002 to 2010. The empirical results suggest that the proposed input variables are significantly related to the output variables and that the input and output combinations impact the efficiency scores of both Islamic and conventional banks. The results from the Constant Return to Scale (CRS) and Variable Return to Scale (VRS) procedures in three out of five DEA models suggest that Islamic banks are significantly less efficient than conventional banks. Results from the remaining two DEA indicate no significant differences in the efficiency status of these banks.

Keywords: bank efficiency; data envelopment analysis; DEA window analysis; technical efficiency; scale efficiency; GCC; Gulf Cooperation Council; conventional banks; Islamic banks; Islamic finance.

DOI: 10.1504/IJFSM.2013.058070

International Journal of Financial Services Management, 2013 Vol.6 No.3, pp.236 - 251

Received: 23 Apr 2013
Accepted: 20 Sep 2013
Published online: 13 Sep 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article