Title: Price efficiency on Islamic banks vs. conventional banks in Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia: impact of country governance

Authors: Fakarudin Kamarudin; Fadzlan Sufian; Annuar Md. Nassir; Nazratul Aina Mohamad Anwar; Nur Ainna Ramli; Khar Mang Tan; Hafezali Iqbal Hussain

Addresses: Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan, Malaysia ' Universiti Islam Malaysia, Blok I, Bangunan MKN Embassy Techzone, Jalan Teknokrat 2, 63000 Cyberjaya, Selangor Darul Ehsan, Malaysia ' Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan, Malaysia ' Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Bandar Baru Nilai, Nilai, 71800, Negeri Sembilan, Malaysia ' Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Bandar Baru Nilai, Nilai, 71800, Negeri Sembilan, Malaysia ' Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan, Malaysia ' Universiti Kuala Lumpur Business School, Level 8, Bangunan Yayasan Selangor, 74, Jalan Raja Muda Abdul Aziz, Kg Baru, 50300 Kuala Lumpur, Malaysia

Abstract: This research investigate the impact of six dimensions of country governance to the price efficiency of Islamic and conventional banks. The empirical analysis is focused on the Islamic and conventional banks operating in the Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia countries. The data envelopment analysis (DEA) method applied to compute the revenue efficiency of Islamic and conventional banks. Then used the Multivariate Panel Regression Analysis with the Ordinary Least Square as an estimation method to investigate the potential determinants and the effect of country governance on the revenue efficiency. The empirical findings indicate that greater voice and accountability, political stability, regulatory quality, rule of law and control of corruption enhance the revenue efficiency of both Islamic and conventional banks. The dimension of government effectiveness exerts positive sign relationship with the banks revenue efficiency only on conventional banks.

Keywords: revenue efficiency; DEA; data envelopment analysis; ordinary least square; country governance.

DOI: 10.1504/IJMEF.2018.095743

International Journal of Monetary Economics and Finance, 2018 Vol.11 No.4, pp.363 - 383

Received: 12 May 2017
Accepted: 28 Oct 2017
Published online: 19 Oct 2018 *

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