Title: Application of fuzzy data envelopment analysis to measure relative efficiency of Islamic banks: evidence from Malaysia

Authors: Lazim Abdullah

Addresses: School of Informatics and Applied Mathematics, Universiti Malaysia Terengganu, 21030 Kuala Terengganu, Malaysia

Abstract: Bank efficiency measures are important as it provides a gauge in delivering services and performance. It is more important in a case where Islamic and conventional banking systems are operated simultaneously. Most people perceived that Islamic banking systems are less competitive and not efficient. This paper aims to measure the relative efficiency of selected Islamic banks in Malaysia. The paper uses the non-parametric method, fuzzy data envelopment analysis, to propose the relative efficiency measures. Three input data and three output data are computed to establish efficiency measures. The final results indicate that all selected Islamic banks have achieved efficiency measures more than 0.9 out of 1 in measurement scale. The CIMBIB is measured as the most efficient bank among four Islamic banks in Malaysia. The findings need to be corroborated by more input and output data, and also subjected to validation mechanism where these suggestions could be left for future research.

Keywords: Islamic banking; triangular fuzzy numbers; data envelopment analysis; efficiency measures; Malaysia.

DOI: 10.1504/IJSTM.2023.135059

International Journal of Services Technology and Management, 2023 Vol.28 No.5/6, pp.295 - 303

Received: 04 Sep 2017
Accepted: 18 Jun 2018
Published online: 30 Nov 2023 *

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