Performance and productivity in Islamic and conventional banks

Evidence from the global financial crisis

Christos Alexakis, Marwan Izzeldin, Jill Johnes, Vasileios Pappas

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We assess the performance and productivity of Islamic and conventional banks usingfinancial ratios, a two- and afour-component meta-frontier Malmquist productivity index (MPI). We focus on the relatively homogenous GCCregion over the 2006–2012 period that covers the globalfinancial crisis. Wefind that Islamic banks exhibit worsecost and profit performance but are on a par with regards to revenue performance compared to the conventionalones. The components of the meta-frontier MPI suggest that the technology of conventional banks improvesmarkedly in years leading to thefinancial crisis and declines thereafter. Islamic banks show a similar but moremuted pattern. By contrast, the pronounced within-Islamic bank group variation in technical efficiency andtechnology suggests that Islamic banks are quite heterogeneous as a group. Overall, the MPI analysis suggests thatthe two bank types are more aligned following the globalfinancial crisis. Policy makers should be wary of theimportant variations within the Islamic banking industry when implementing bank regulations.
Original languageEnglish
Pages (from-to)1-14
Number of pages14
JournalEconomic Modelling
Volume79
Early online date2 Oct 2018
DOIs
Publication statusPublished - Jun 2019

Fingerprint

Productivity
Global financial crisis
Islamic financial institutions
Malmquist productivity index
Metafrontier
Islamic banking
Technical efficiency
Profit
Revenue
Bank regulation
Banking industry
Politicians

Cite this

Alexakis, Christos ; Izzeldin, Marwan ; Johnes, Jill ; Pappas, Vasileios. / Performance and productivity in Islamic and conventional banks : Evidence from the global financial crisis. In: Economic Modelling. 2019 ; Vol. 79. pp. 1-14.
@article{fe0dc8722a4b47bfa5762a6bbb8e72cd,
title = "Performance and productivity in Islamic and conventional banks: Evidence from the global financial crisis",
abstract = "We assess the performance and productivity of Islamic and conventional banks usingfinancial ratios, a two- and afour-component meta-frontier Malmquist productivity index (MPI). We focus on the relatively homogenous GCCregion over the 2006–2012 period that covers the globalfinancial crisis. Wefind that Islamic banks exhibit worsecost and profit performance but are on a par with regards to revenue performance compared to the conventionalones. The components of the meta-frontier MPI suggest that the technology of conventional banks improvesmarkedly in years leading to thefinancial crisis and declines thereafter. Islamic banks show a similar but moremuted pattern. By contrast, the pronounced within-Islamic bank group variation in technical efficiency andtechnology suggests that Islamic banks are quite heterogeneous as a group. Overall, the MPI analysis suggests thatthe two bank types are more aligned following the globalfinancial crisis. Policy makers should be wary of theimportant variations within the Islamic banking industry when implementing bank regulations.",
keywords = "Performance, Banking sector, Financial ratios, Meta-frontier Malmquist productivity analysis, Gulf Cooperation Council",
author = "Christos Alexakis and Marwan Izzeldin and Jill Johnes and Vasileios Pappas",
year = "2019",
month = "6",
doi = "10.1016/j.econmod.2018.09.030",
language = "English",
volume = "79",
pages = "1--14",
journal = "Economic Modelling",
issn = "0264-9993",
publisher = "Elsevier",

}

Performance and productivity in Islamic and conventional banks : Evidence from the global financial crisis. / Alexakis, Christos; Izzeldin, Marwan; Johnes, Jill; Pappas, Vasileios.

In: Economic Modelling, Vol. 79, 06.2019, p. 1-14.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Performance and productivity in Islamic and conventional banks

T2 - Evidence from the global financial crisis

AU - Alexakis, Christos

AU - Izzeldin, Marwan

AU - Johnes, Jill

AU - Pappas, Vasileios

PY - 2019/6

Y1 - 2019/6

N2 - We assess the performance and productivity of Islamic and conventional banks usingfinancial ratios, a two- and afour-component meta-frontier Malmquist productivity index (MPI). We focus on the relatively homogenous GCCregion over the 2006–2012 period that covers the globalfinancial crisis. Wefind that Islamic banks exhibit worsecost and profit performance but are on a par with regards to revenue performance compared to the conventionalones. The components of the meta-frontier MPI suggest that the technology of conventional banks improvesmarkedly in years leading to thefinancial crisis and declines thereafter. Islamic banks show a similar but moremuted pattern. By contrast, the pronounced within-Islamic bank group variation in technical efficiency andtechnology suggests that Islamic banks are quite heterogeneous as a group. Overall, the MPI analysis suggests thatthe two bank types are more aligned following the globalfinancial crisis. Policy makers should be wary of theimportant variations within the Islamic banking industry when implementing bank regulations.

AB - We assess the performance and productivity of Islamic and conventional banks usingfinancial ratios, a two- and afour-component meta-frontier Malmquist productivity index (MPI). We focus on the relatively homogenous GCCregion over the 2006–2012 period that covers the globalfinancial crisis. Wefind that Islamic banks exhibit worsecost and profit performance but are on a par with regards to revenue performance compared to the conventionalones. The components of the meta-frontier MPI suggest that the technology of conventional banks improvesmarkedly in years leading to thefinancial crisis and declines thereafter. Islamic banks show a similar but moremuted pattern. By contrast, the pronounced within-Islamic bank group variation in technical efficiency andtechnology suggests that Islamic banks are quite heterogeneous as a group. Overall, the MPI analysis suggests thatthe two bank types are more aligned following the globalfinancial crisis. Policy makers should be wary of theimportant variations within the Islamic banking industry when implementing bank regulations.

KW - Performance

KW - Banking sector

KW - Financial ratios

KW - Meta-frontier Malmquist productivity analysis

KW - Gulf Cooperation Council

UR - http://www.scopus.com/inward/record.url?scp=85060456633&partnerID=8YFLogxK

U2 - 10.1016/j.econmod.2018.09.030

DO - 10.1016/j.econmod.2018.09.030

M3 - Article

VL - 79

SP - 1

EP - 14

JO - Economic Modelling

JF - Economic Modelling

SN - 0264-9993

ER -