The Efficiency of Islamic Banks: Empirical Evidence from the Asian Countries' Islamic Banking Sectors 

by

Nor Hayati bt Ahmad, Mohamad Akbar Noor Mohamad Noor and Fadzlan Sufian

The paper investigates the efficiency of the Islamic banking sectors in four Asian countries during the period of 2001-2006. The results suggest that the Asian Islamic banks have exhibited mean technical efficiency highest of 86.5% at 2004 during study period suggesting mean input waste of 13.5%. Overall the results imply that the Asian Islamic banking sectors have been operating at a relatively optimal scale of operations. 

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Islamic vs. Conventional Banking: Business Model, Efficiency  

and Stability 

by

Thorsten Beck, Asli Demirgüç-Kunt  

and Ouarda Merrouche  

This paper discusses Islamic banking products and interprets them in the context of financial inter-mediation theory. Anecdotal evidence shows that many of the conventional products can be redrafted as Sharia-compliant products, so that the differences are smaller than expected. Comparing conventional and Islamic banks and controlling for other bank and country characteristics, the authors find few significant differences in business orientation, efficiency, asset quality, or stability.

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The Evolution of Islamic Finance in Southeast Asia:  

The Case of Malaysia 

The purpose of this paper is threefold: to explain why the Islamic financial system was introduced in Malaysia; to outline how the Malaysian government has promoted this system; and to analyze the development of the Islamic financial system with a specific focus on the banking sector.  In Malaysia, the first Islamic bank, Bank Islam Malaysia Bhd., was established in 1983.  One turning point of the Islamic financial system in the country was the Financial Sector Master Plan presented by the central bank in 2001. 

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Banking for the Poor:

The Role of Islamic Banking in Microfinance Initiatives 

The main purpose of this paper is to review the microfinance scheme and discuss how Islamic banks can participate in such an endeavor without actually compromising the issue of institutional viability and sustainability. The paper is based on an extensive review of microfinance with the objective of building a case for Islamic banking to participate in a microfinance initiative. As reviewed in this paper, microfinance requires innovative approaches beyond the traditional financial intermediary role.

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Islamic Microfinance in Indonesia:  

The Challenge of Institutional Diversity, Regulation, and Supervision

Forays into Islamic microfinance have been few and scattered and of limited outreach. Some have been mandated by the state, but lack popular demand, others have emerged in response to popular demand, but lack regulatory support by the state. This has provided the background for a more systematic study of Islamic microfinance in Indonesia, the largest Muslim country, where several strands of Islamic microfinance, formal and semi-formal, have evolved since 1990 in parallel and Islamic banking is now recognized as a dual banking system in Indonesia.

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The Rise of Customary Businesses in International Financial Markets:

An Introduction to Islamic Finance  

and the Challenges of  

International Integration