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THE X-EFFICIENCY OF THE SUDANESE ISLAMIC BANKS

International Journal of Economics, Management and Accounting

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Title THE X-EFFICIENCY OF THE SUDANESE ISLAMIC BANKS
 
Creator Saaid, Abd elrhman Elzahi
Rosly, Mansor H. Ibrahim, Saiful Azhar
Abdullah, Naziruddin
 
Description Important changes have taken place in the Sudanese banking industry since 1989. The transformation of the banking industry to conform to the Islamic principles has put the spotlight on the performance of the Islamic banks in Sudan. This study investigates the X-efficiency (technical and allocative) of these banks. The study used the basic Stochastic Frontier Approach (SFA). This is accomplished by decomposing the error term into two components, namely random noise (vi) and possible inefficiency (ui). The empirical results tend to suggest that banks in the sample had low levels of X-efficiency. This implied that the Sudanese Islamic banks were not optimizing their inputs usage. However, the results also showed that the inefficiency in the Sudanese Islamic banks could be more associated with inputs wasting (technical inefficiency) rather than choosing the incorrect input combinations (allocative inefficiency). The study has several important policy implications to offer, one of which is that it could be taken as a guideline for the Sudanese government to chart a policy on banking deregulation and mergers. Moreover, the study provides some information and identifies the source of X-inefficiency, which could, in turn, be used to assist banks’ managements to overcome the problems of inefficiency.JEL classification: G21Key words: X-inefficiency, Islamic banks, Stochastic Frontier Approach
 
Publisher Kulliyyah of Economics and Management Sciences
 
Date 2013-02-28
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/90
 
Source International Journal of Economics, Management and Accounting; Vol 11 No 2 (2003)
2462-1420
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/90/73