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Comparison of efficiency of Islamic and conventional banking system by parametric and non-parametric approaches in selected countries
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Rahim Bayat1   , Asghar Abolhasani hastiani2 , Alireza Sharif Moghaddasi3 , Minoo Amini Milani3 |
1- phd student of Department of Economics, university of Payam Noor, Tehran, Iran , rahimbayat@student.pnu.ac.ir
2- professor of Department of Economics, university of Payam Noor, Tehran, Iran
3- Assistant professor of Department of Economics, university of Payam Noor, Tehran, Iran |
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Abstract: (1110 Views) |
The main goal of this research is to investigate the performance of the Islamic banking system compared to the conventional banking system in terms of efficiency criteria by two parametric and non-parametric approaches. For this purpose, two approaches of data envelopment analysis and stochastic frontier analysis were used. The results of the investigation, in terms of both approaches, indicate that Islamic banks are more efficient than banks operating in the conventional system according to the studied input and output variables. The average efficiency of Islamic banks in DEA and SFA models evaluated as 74 and 56.15 percent, respectively, and for conventional banks as 69.5 and 43.18 percent, respectively. The average efficiency of all banks was 71.8% in DEA and 37.8% in SFA. The results also indicated that Iranian banks performed weaker than other Islamic banks in terms of granting the loans, but better than conventional banks. Also, public banks in Iran perform better than private banks in terms of granting loans. Also, the findings of this research showed that the risk of stock returns related to selected Islamic banks is lower compared to conventional banks, both in terms of systematic risk and unsystematic risk. |
Article number: 6 |
| Keywords: Islamic banking, Conventional banking, Efficiency, Data Envelopment Analysis, Stochastic Frontier Analysis |
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Full-Text [PDF 754 kb]
(404 Downloads)
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Article type: Research |
Subject:
Special
Received: 2022/10/29 | Accepted: 2023/02/18 | Published: 2023/05/31
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