Mohamed Hisham Yahya

A comparative study on the level of efficiency between Islamic and conventional banking systems in Malaysia

Purpose - The purpose of this paper is to study the difference (or lack of difference) in the efficiency level of Islamic and conventional banking in Malaysia. Are the Islamic banks performing as good as the conventional banks, even though they are constrained by Islamic tenets? Design/methodology/approach - Data envelopment analysis is used to measure the efficiency levels of banks in both sectors. Findings - It is found that there is no significant difference in the level of efficiency between Islamic banks and conventional banks. Research limitations/implications - The period of study is only three years, with only two banks which have been operating for more than three years, while the other Islamic banks in this study are just beginning their operation in Islamic banking. The inclusion of foreign banks operating in Malaysia in this analysis might distort the findings, as foreign banks have different capital structures and objectives compared to local ones. Practical implications - The paper shows that even though Islamic banks are limited by Islamic tenets in their operations, they are able to maintain a performance that is equivalent to the conventional banks. Originality/value - The paper makes comparisons of the efficiency levels between two different banking systems.

Assessing the Effect of Mergers and Acquisitions on Revenue Efficiency: Evidence from Malaysian Banking Sector

The article attempts to examine the effect of mergers and acquisitions (M&As) on Malaysian banks’ revenue efficiency. The data gathered in this study are divided into two event windows: the pre-merger (1995–1996) and post-merger (2002–2009) periods. The sample selected for this study comprised 34 commercial banks, including the control group of banks. We employ the Data Envelopment Analysis (DEA) method to measure the efficiency of Malaysian banks during both the pre- and post-merger periods. The results indicate that the Malaysian banks’ revenue efficiency has not significantly improved during the post-merger compared to the pre-merger period.

Re-thinking: Risk Governance?

Abstract Risk governance has evolved tremendously in the banking industry. The practice recommends the imperative role of Chief Risk Officer (CRO) to oversee risk. This study explores risk governances influence over Islamic banks’ performance. A multivariate analysis technique is used simultaneously via Structural Equation Modeling (SEM). This study employed cross-sectional sample of 200 Islamic banks across 21 countries for the year 2014. To examine risk governance and Islamic banks performance, this study captures seventeen variables developed from risk management and corporate governance (ROA, ROE, Profit Margin, CRO, Shariah committee member, CEO, board size, remuneration meeting, credit rating, external audit, accounting standard, loan loss provision, capital adequacy ratio, total deposit ratio, GDP, central bank lending rate and inflation). The simulation result revealsrisk governance acts as mediating variable for Islamic banks’ performance.