Social and Behavioral Sciences Commons^™

The Impact Of Efficiency On Islamic Banks’ Performance: A Cross-Country Study, Fatma Ahmed, Khaled Hussainey, Elsayeda Ismail

Economics

This paper contributes to Islamic finance literature by offering large-scale evidence on the impact of efficiency on the performance of Islamic banks all over the world. Our initial sample includes all Islamic banks around the world. Using a sample of 151 Islamic Banks with financial years ending within the period January 2013 and December 2013, we examine, controlling for Bank-specific characteristics and country-specific characteristics, whether high efficiency leads to more profitability in Islamic Banks. We define higher efficiency as the lower Cost-to-income ratio. We find that higher levels of Islamic banks’ efficiency banks (i.e. lower Cost-to-income ratio) are positively associated …