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: Journal PublicationArticlepeer-review

16 Citations (Scopus)

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
Pages (from-to)67-74
Number of pages8
JournalQuarterly Review of Economics and Finance
Volume74
DOIs
Publication statusPublished - Nov 2019
Externally publishedYes

Keywords

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

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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