Comparison of the efficiency measurement of the conventional and Islamic banks

• Authors: Hussam Musa , Viacheslav Natorin , Zdenka Musova , Pavol Durana

Abstracts

EN

Research background: Islamic banks appeared on the world scene as active players over two decades ago. Many of the principles upon which Islamic banking is based have been commonly accepted all over the world. Financial institutions driven by Islamic principles acquire new clientele without excessive marketing, due to preservation of conservative values. Contrary to the conventional investment banks, their value is based on real money, and not on virtual activities from swap and derivative assets. Competition between conventional (or traditional) and Islamic banks is increasing every day, moreover, Islamic financial institutions are more resistant to the crisis. Our study contains analysis and comparison of economic efficiency of the conventional and Islamic banks. Besides the fact that traditional and Islamic banks apply inputs differently, the reason of better efficiency of Islamic banks may be connected with different approach to the risk management and control of the banking operations by the Sharia commission. Purpose of the article: The main aim of the article is to compare the economic efficiency of the conventional and Islamic banks in Europe. Methods: To achieve the aim of the paper, firstly the selected financial indicators of traditional and Islamic banks in Europe were compared. The second, the analysis of the economic efficiency of the selected 1460 conventional and Islamic financial institutions using DEA methods was conducted. Findings & Value added: Research results indicated methodological differences in the economic efficiency measuring in the Islamic banks. At the same time, the higher economic efficiency of Islamic banks was confirmed. The results are motivating for the follow-up investigation into the causes of higher efficiency of Islamic banks compared to traditional banks.

Keywords

EN

Islamic banks; conventional banks; efficiency; DEA

• Publisher: Instytut Badań Gospodarczych
• Journal: Oeconomia Copernicana
• Year: 2020
• Volume: 11
• Issue: 1
• Pages: 29-58

Dates

published

2020

Contributors

author

Hussam Musa

• Matej Bel University in Banska Bystrica

• https://orcid.org/0000000244928770

author

Viacheslav Natorin

• Matej Bel University in Banska Bystrica

• https://orcid.org/0000000343665531

author

Zdenka Musova

• Matej Bel University in Banska Bystrica

• https://orcid.org/0000000210678291

author

Pavol Durana

• University of Zilina

• https://orcid.org/0000000159751958

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Identifiers

DOI

10.24136/oc.2020.002

Biblioteka Nauki

19233487