Shariah Supervision of Funds

...

Results and Discussion

Generally, two approaches are normally taken in determining what constitutes bank input and output. With respect to the intermediation approach, bank assets measure outputs and liabilities measure inputs while inputs in the production approach are physical entities such as labor and capital. This study employs intermediation approach in the selection of three inputs and three outputs. Input variables consist of personnel expenses (PE) as a proxy for labor, fixed assets (FA) to represent capital, and total deposits and short term funding (hereafter denoted as DEP). Total loans and advances (LN), securities portfolio (SEC) and off-balance sheet items (OBS) are the chosen output variables. The OBS variable is selected to reflect the increasing contribution of non-traditional activities to ards bank’s total income. Table 1 provides descriptive statistics of the variables employed; the variables are based on the nominal value and reported in millions of Ringgit Malaysia (RM). The total number of observations is 84, for the period of 2006 to 2011

[pic 4]

[pic 5]

Conclusion

This review researches the proficiency execution of sixteen Islamic banks, outside and local banks for the time of 2006 to 2011 by utilizing Data Envelopment Analysis. This review measures the cost effectiveness of the Malaysian saving money part and its deteriorations - specialized productivity and allocative proficiency. In accomplishing this objective some noteworthy outcomes as to the Malaysian keeping money division are found. The outcomes demonstrate that, all things considered the primary supporter of cost proficiency for Islamic local and remote banks in Malaysia is allocative productivity. Also, the outcomes locate that Islamic remote banks are more proficient than local saves money regarding immaculate specialized effectiveness and allocative productivity.