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The profit efficiency: evidence from islamic banks in Indonesia
Muryani Arsal1, Nik Intan Norhan Abdul Hamid2.
This study investigates the profit efficiency of
Indonesia Islamic banks during the period
2011 to 2014. The sample comprised of 11
domestic and foreign Islamic banks. We
employ non parametric Data Envelopment
Analysis method to compute the profit
efficiency levels, through of intermediation
approach. Furthermore, this study
considering input and output oriented
measures. Deposits, labour cost and fixed
assets are taken as an input variable while
output variables are price of profit operation.
We find that only three Islamic banks which
have been full profit-efficient, while another
eight Islamic banks are classified as profitinefficient.
The finding of this study are
expected to contribute significantly to the
existing knowledge on the operating
performance of Islamic banks, Islamic bank’s
management, and decision-making for
regulators of Islamic banks in Indonesia.
Affiliation:
- Universiti Teknologi Malaysia, Malaysia
- Universiti Teknologi Malaysia, Malaysia
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