FINANCIAL AND SOCIAL EFFICIENCY ON INDONESIAN ISLAMIC BANKS
This paper explores financial and social efficiency in one assessment framework. In order to measure efficiency level of Islamic Banking Industry, this study uses Data Envelopment Analysis (DEA) and Free Disposal Hull (FDH) methods. The results show that the level of financial efficiency of Islamic...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Bank Indonesia
2019-11-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
| Subjects: | |
| Online Access: | http://jimf-bi.org/index.php/JIMF/article/view/1154 |
| Summary: | This paper explores financial and social efficiency in one assessment framework. In
order to measure efficiency level of Islamic Banking Industry, this study uses Data
Envelopment Analysis (DEA) and Free Disposal Hull (FDH) methods. The results
show that the level of financial efficiency of Islamic banks in Indonesia from 2013 to
2018 tends to decrease. On the contrary, the level of social efficiency of Islamic banks
in Indonesia has a tendency to increase. Furthermore, the value of social efficiency of
Islamic banks in Indonesia was relatively lower compared to the value of financial
efficiency. Within the Financial-Social Efficiency Quadrant framework, the study
classified two Islamic banks in quadrant 1, three in quadrant 2, two in quadrant 3,
and four in quadrant 4. It is imperative for Islamic banks that are in the low level of
‘social efficiency’ to develop a policy to keep in line with the five factors of maqashid
sharia apart of maintaining efficiency in order to reach maslahah. For the regulators,
the social efficiency measurement framework could be an alternative in considering
Islamic bank performance beyond financial efficiency. |
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| ISSN: | 2460-6146 2460-6618 |