Measuring efficiency Analysis: Islamic VS Commercial bank in Pakistan

Abstract

Abstract

This paper seeks to analyze efficiency of Islamic banking sector with conventional banking sector in Pakistan. For this purpose to represent Islamic banking sector, Meezan Bank Limited is selected, as the bank operates on the basis of Islamic banking system. While for conventional banking sector Habib Bank Limited is selected. To compare the performance and efficiency certain inputs and outputs have been selected. Assets, Employees and Branches have been taken as inputs while outputs are deposits held by these banks and profit after tax. Data Envelopment Analysis technique is used using TORA operation research software to analyze and interpret results. Conclusively it is noted that both banks are performing efficient with regard to available resources. Hence an increase in inputs will have positive impact on the outputs.

Key Words: Banking efficiency, Data envelopment analysis, Islamic banking system, conventional banking system.