A Comparative study on the efficiency of islamic and conventional banks in mena region applying data envelopement analysis (DEA )

Abstract

The aim of this study is twofold, the first is to measure the efficiency of Islamic and conventional banks in MENA region using the data envelopment analysis (DEA) approach. The second is comparing between both Islamic and conventional banks so we can determine the which banks are more efficient and see if there any difference between Islamic banks efficiency and conventional banks efficiency by using the Mann-Whitney non-parametric test. This study is for the time period 2016 to 2018. It is based on financial data of 20 banks from 10 countries from MENA region which divided into 5 countries from North Africa and 5 countries from Middle East. The analysis of the results obtained by the DEA approach allowed us to determine which are efficient and witch banks are not and so determine which banks are benchmarks. As for the comparison we used the Mann-Whitney non-parametric test to obtain the rank sum on the scores of efficiencies of both banks and see if there are any significant differences between efficiency of Islamic banks and efficiency of conventional banks. The result of this test shows that Islamic banks in MENA region are mostly more efficient than conventional banks but there was no significant difference between Islamic banks efficiency and conventional banks efficiency.