FINANCIAL EFFICIENCY ANALYSIS IN ISLAMIC BANKS: TURKEY AND MALAYSIA MODELS

Abstract

This study uses Data Envelopment Analysis for the efficiency measurements while using the Malmquist Total Factor Productivity Index in order to measure the total factor productivity change. This study involves 4 Islamic banks operating in Turkey and 13 Islamic banks operating in Malaysia. Half of these Islamic banks operating in Turkey and Malaysia meet the technical productivity (CCR) value. In other words, half of these Islamic banks are able to use their Total Assets and Total Equities efficiently. It was found that the Technical Efficiency Change (EFFCH) value of the Islamic banks was never recorded above 1 for any time period. It was found that the Islamic Banks are unlikely to reach the production limit.

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