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Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia

Islamic banks in Africa and Asia have been characterised by some technical inefficiencies. The sources (managerial issues or scale of operation) of these inefficiencies still remain a problem of empirical investigation since mixed reports have been given in that regard. This study therefore investig...

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Main Authors: Jimoh, Abdulrazaq Taiye, Ijaiya, Muftau Adeniyi, Attah, John Adeyi, Abdulmumin, Biliqees Ayoola, Muhtar, Oyebola Fatima Etudaiye
Format: Article
Language:English
Published: UUM Press 2022
Subjects:
HG Finance
Online Access:https://repo.uum.edu.my/id/eprint/29991/1/JBMA%2012%2002%202022%2081-102.pdf
https://doi.org/10.32890/jbma2022.12.2.5
https://repo.uum.edu.my/id/eprint/29991/
https://e-journal.uum.edu.my/index.php/jbma/article/view/15494
https://doi.org/10.32890/jbma2022.12.2.5
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spelling my.uum.repo.299912023-11-28T08:58:51Z https://repo.uum.edu.my/id/eprint/29991/ Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia Jimoh, Abdulrazaq Taiye Ijaiya, Muftau Adeniyi Attah, John Adeyi Abdulmumin, Biliqees Ayoola Muhtar, Oyebola Fatima Etudaiye HG Finance Islamic banks in Africa and Asia have been characterised by some technical inefficiencies. The sources (managerial issues or scale of operation) of these inefficiencies still remain a problem of empirical investigation since mixed reports have been given in that regard. This study therefore investigated the sources of inefficiencies by decomposing technical efficiencies of the banks and comparing the components of Islamic banks in the low-income countries of Africa and Asia. Data were collected from annual reports of the selected banks and analysed using both descriptive and inferential statistical tools. Data Envelopment Analysis (DEA) was conducted to estimate the pure technical and scale efficiencies of the banks. The study found that the inefficiency attributable to all the selected banks were due to pure technical efficiency (0.876), which was lower than the mean value of scale efficiency (0.917). That is, the inefficiencies were caused largely by managerial problems rather than operating scale. It was also found that Islamic banks in Asia were more technically efficient than those from Africa in terms of pure technical (0.920>0.827) and scale efficiencies (0.934>0.902). The study concludes that managerial issues such as insufficient competent staff, poor monitoring and so on were the causes of low efficiency attributed to Islamic Banks in Africa. It was thus recommended that Islamic banks in Africa should employ staff members who are competent with requisite knowledge of Islamic finance to improve the pure technical and overall efficiency of the banks. UUM Press 2022 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/29991/1/JBMA%2012%2002%202022%2081-102.pdf Jimoh, Abdulrazaq Taiye and Ijaiya, Muftau Adeniyi and Attah, John Adeyi and Abdulmumin, Biliqees Ayoola and Muhtar, Oyebola Fatima Etudaiye (2022) Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia. Journal of Business Management and Accounting (JBMA), 12 (2). pp. 81-102. ISSN 2231-9298 (e2636-9249) https://e-journal.uum.edu.my/index.php/jbma/article/view/15494 https://doi.org/10.32890/jbma2022.12.2.5 https://doi.org/10.32890/jbma2022.12.2.5
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Jimoh, Abdulrazaq Taiye
Ijaiya, Muftau Adeniyi
Attah, John Adeyi
Abdulmumin, Biliqees Ayoola
Muhtar, Oyebola Fatima Etudaiye
Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia
description Islamic banks in Africa and Asia have been characterised by some technical inefficiencies. The sources (managerial issues or scale of operation) of these inefficiencies still remain a problem of empirical investigation since mixed reports have been given in that regard. This study therefore investigated the sources of inefficiencies by decomposing technical efficiencies of the banks and comparing the components of Islamic banks in the low-income countries of Africa and Asia. Data were collected from annual reports of the selected banks and analysed using both descriptive and inferential statistical tools. Data Envelopment Analysis (DEA) was conducted to estimate the pure technical and scale efficiencies of the banks. The study found that the inefficiency attributable to all the selected banks were due to pure technical efficiency (0.876), which was lower than the mean value of scale efficiency (0.917). That is, the inefficiencies were caused largely by managerial problems rather than operating scale. It was also found that Islamic banks in Asia were more technically efficient than those from Africa in terms of pure technical (0.920>0.827) and scale efficiencies (0.934>0.902). The study concludes that managerial issues such as insufficient competent staff, poor monitoring and so on were the causes of low efficiency attributed to Islamic Banks in Africa. It was thus recommended that Islamic banks in Africa should employ staff members who are competent with requisite knowledge of Islamic finance to improve the pure technical and overall efficiency of the banks.
format Article
author Jimoh, Abdulrazaq Taiye
Ijaiya, Muftau Adeniyi
Attah, John Adeyi
Abdulmumin, Biliqees Ayoola
Muhtar, Oyebola Fatima Etudaiye
author_facet Jimoh, Abdulrazaq Taiye
Ijaiya, Muftau Adeniyi
Attah, John Adeyi
Abdulmumin, Biliqees Ayoola
Muhtar, Oyebola Fatima Etudaiye
author_sort Jimoh, Abdulrazaq Taiye
title Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia
title_short Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia
title_full Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia
title_fullStr Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia
title_full_unstemmed Comparative Analysis of Technical Efficiency of Islamic Banks in Selected Low-Income Countries of Africa and Asia
title_sort comparative analysis of technical efficiency of islamic banks in selected low-income countries of africa and asia
publisher UUM Press
publishDate 2022
url https://repo.uum.edu.my/id/eprint/29991/1/JBMA%2012%2002%202022%2081-102.pdf
https://doi.org/10.32890/jbma2022.12.2.5
https://repo.uum.edu.my/id/eprint/29991/
https://e-journal.uum.edu.my/index.php/jbma/article/view/15494
https://doi.org/10.32890/jbma2022.12.2.5
_version_ 1783881390856601600
score 13.211869

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