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Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank

The establishment of Islamic banks that started in many parts of the Muslim countries some years ago has become a fact. However, this phenomenon needs to be justified empirically. Sudan has adopted Islamic principles for its entire banking industry. This has put the spotlight on the performance of t...

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Main Authors: Abdullah, Naziruddin, Saaid, Abd Elrhman Elzahi
Format: Article
Language:English
Published: Universiti Utara Malaysia 2003
Subjects:
HF Commerce
Online Access:http://repo.uum.edu.my/322/1/Naziruddin_Abdullah.pdf
http://repo.uum.edu.my/322/
http://ijms.uum.edu.my
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spelling my.uum.repo.3222010-07-27T08:34:29Z http://repo.uum.edu.my/322/ Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank Abdullah, Naziruddin Saaid, Abd Elrhman Elzahi HF Commerce The establishment of Islamic banks that started in many parts of the Muslim countries some years ago has become a fact. However, this phenomenon needs to be justified empirically. Sudan has adopted Islamic principles for its entire banking industry. This has put the spotlight on the performance of the Islamic banks in the Sudan. In this paper the stochastic cost frontier function with a time series of cross-section data on Sudanese Islamic banks is used. The error terms are decomposed into v and u , which represent random noise and technical inefficiency, respectively. The banks in the sample have been divided into three categories, namely national banks, private domestic banks, and foreign joint venture banks. The technical efficiency was measured and the sources of ineficiency were investigated. The results showed that all banks in these groups were technically inefficient. The results also reveal that the national banks and private domestic banks were more technically inefficient than the foreign joint venture banks. The sources of ineficiency are attributed to the ownership, lack of banking technologies, severe economic sanctions and the lack of managing the high risk of the Islamic financing modes. This result has very good policy implications for the recent Sudanese government privatization policy regarding its national banks. Universiti Utara Malaysia 2003 Article PeerReviewed application/pdf en http://repo.uum.edu.my/322/1/Naziruddin_Abdullah.pdf Abdullah, Naziruddin and Saaid, Abd Elrhman Elzahi (2003) Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank. Analisis, 10 (1). pp. 89-106. ISSN 0127-8983 http://ijms.uum.edu.my
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
language English
topic HF Commerce
spellingShingle HF Commerce
Abdullah, Naziruddin
Saaid, Abd Elrhman Elzahi
Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank
description The establishment of Islamic banks that started in many parts of the Muslim countries some years ago has become a fact. However, this phenomenon needs to be justified empirically. Sudan has adopted Islamic principles for its entire banking industry. This has put the spotlight on the performance of the Islamic banks in the Sudan. In this paper the stochastic cost frontier function with a time series of cross-section data on Sudanese Islamic banks is used. The error terms are decomposed into v and u , which represent random noise and technical inefficiency, respectively. The banks in the sample have been divided into three categories, namely national banks, private domestic banks, and foreign joint venture banks. The technical efficiency was measured and the sources of ineficiency were investigated. The results showed that all banks in these groups were technically inefficient. The results also reveal that the national banks and private domestic banks were more technically inefficient than the foreign joint venture banks. The sources of ineficiency are attributed to the ownership, lack of banking technologies, severe economic sanctions and the lack of managing the high risk of the Islamic financing modes. This result has very good policy implications for the recent Sudanese government privatization policy regarding its national banks.
format Article
author Abdullah, Naziruddin
Saaid, Abd Elrhman Elzahi
author_facet Abdullah, Naziruddin
Saaid, Abd Elrhman Elzahi
author_sort Abdullah, Naziruddin
title Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank
title_short Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank
title_full Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank
title_fullStr Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank
title_full_unstemmed Measurement and sources of technical inefficiency : some evidence from the Sudanese Islamic bank
title_sort measurement and sources of technical inefficiency : some evidence from the sudanese islamic bank
publisher Universiti Utara Malaysia
publishDate 2003
url http://repo.uum.edu.my/322/1/Naziruddin_Abdullah.pdf
http://repo.uum.edu.my/322/
http://ijms.uum.edu.my
_version_ 1644277766634340352
score 13.211869

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