Bank performance in Malaysia: the case of islamic banks and conventional banks
This study examines the cost efficiency of Malaysian banking sector by comparing the efficiency performance between Islamic and conventional commercial banks over the period of 2006 to 2009. In terms of methodology, this study differs from previous studies because it employed three methods namely data envelopment analysis (DEA) , Malmquist productivity index and Tobit regression analysis. Overall, the results show that the main contributor of cost efficiency for conventional commercial banks in Malaysia is technical efficiency; while in contrast, the main contributor for cost efficiency of Islamic commercial banks in Malaysia is allocative efficiency. These results indicate that while conventional commercial banks have been efficient in utilizing information technology and electronic, Islamic commercial banks conversely have been efficient in allocating and utilizing resources.