Bootstrap DEA Analysis of Comparative Efficiencies of Islamic Banks: Across Nine South and Southeast Asian Countries

Abstract

Using panel data (2011-2016), this paper applied the Bootstrap Data Envelope Analysis (DEA) and obtained overall technical efficiencies (TE), pure technical efficiencies (PTE), and scale efficiencies of the Islamic bank of the nine South and Southeast Asian countries The paper found the average TE, PTE, and SE were 77.3 percent, 81.2 percent, and 95.3 percent respectively. Comparison of efficiencies found: (i) the average TE of the Islamic banks of Malaysia was 81.9 percent and was the highest in the region; (ii) the average managerial efficiency (PTE 87.00) of the Islamic banks of Malaysia was the highest in the region except Brunei, Singapore, and Thailand; (iii) The average scale efficiency of Pakistan’s Islamic banks was 96.8 percent and was the highest in the region except Singapore and Maldives.. The reason why the Islamic banks of Malaysia and Pakistan were most efficient in the region is because they were the first to introduce Islamic banks to operating side by side with the conventional banks in the region.