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- Title
Efficiency of the Islamic Banking Sector: Evidence from Two-Stage DEA Double Frontiers Analysis.
- Authors
Mai, Xuan Thi Thanh; Nguyen, Ha Thi Nhu; Ngo, Thanh; Le, Tu D. Q.; Nguyen, Lien Phuong
- Abstract
This paper examines the multi-dimensional efficiency of the Islamic banking sector and its determinants, including the impacts of the COVID-19 pandemic. To do that, we use a novel approach of two-stage data envelopment analysis (DEA) double frontiers to evaluate the overall efficiency of 79 Islamic banks across 16 countries (2005–2020). In the first-stage analysis, we found that the Islamic banking sector experienced an increasing trend in its efficiency and performance, even during the recent pandemic, although it varied across banks and countries. Our empirical results of the second-stage analysis further showed that economic development can help countries both withstand the recent pandemic and improve the efficiency and performance of their (Islamic) banking system. This, in turn, could help speed up the recovery process of the global economy. Since there is evidence that the Islamic banking sector is resilient to the COVID-19 pandemic, it is expected that this sector will be a driving force of such recovery.
- Subjects
BANKING industry; ISLAMIC finance; DATA envelopment analysis; COVID-19 pandemic
- Publication
International Journal of Financial Studies, 2023, Vol 11, Issue 1, p32
- ISSN
2227-7072
- Publication type
Article
- DOI
10.3390/ijfs11010032