The efficiency of Islamic banks: empirical evidence from the Asian countries' Islamic banking sectors

Abstract

The paper investigates the efficiency of the Islamic banking sectors in 16 MENA and Asian countries during the period of 2001&2006. The effic iency estimates of individual banks are evaluated using the non&parametric Data Envelopment Analysis (DEA) method. The results suggest that the MENA Islamic banks have exhibited higher mean technical efficiency relative to their Asian Islamic bank counterparts.with pure technical inefficiency outweighs scale inefficiency in both the MENA and Asian countries banking sectors. The empirical findings also indicate that banks from the MENA region were the most efficient banks by dominating the top part of efficiency frontier over the period.