Technical Efficiency of Islamic and Commercial Banks: Evidence from Pakistan Using DEA Model (2007-2011)

Jumah Ali, Asoessi Darbouk, In Management
2014 unpublished
This study investigates the technical efficiency of two different banking systems (Islamic vs. Conventional banks) operating in Pakistan and gives a comparative analysis between them over a recent unstudied period, using DEA (Data Envelope Analysis) model. As banking systems render as an important factor towards the economic development of a country. Calculating Technical efficiency can help us determine which banking system is more technically efficient and can facilitate in the economic
more » ... pment and stability of a developing nation such as Pakistan. In this study, a sample of 34 different banks is taken which includes Islamic, conventional and foreign banks working in Pakistan. By taking Investments and Advances as outputs and number of employees, operating fixed asset and deposits as inputs in DEA analysis, the technical efficiencies of the banks are found and compared and then Tobit regression is use to determine the internal and external factor's impact on bank's efficiency.