Analysing Islamic Bank Efficiency in Malaysia Using the Standard and Alternative Approaches to Data Envelopment Analysis

The purpose of this paper is to analyse the efficiency of Islamic banks in Malaysia using both the standard approach and the alternative approach to Data Envelopment Analysis (DEA). The standard approach relies on linear averages of outputs and inputs to measure efficiency whereas the alternative approach uses nonlinear averages. Both approaches are tested on 14 Islamic banks in Malaysia for the three-year period, 2008 to 2010. Our overall results for the three years suggest that, the inefficiency level among these banks using the standard approach (SDEA) is much higher than using the alternative approach (ADEA). Implications and future research are also discussed

Requirements and selection decision of customers in Islamic and conventional banking environment

Competition is the main challenge faced by commercial banks globally. They are not only competing just among themselves but also with other institutions within the financial industry. In Malaysia, the competition is becoming fiercer with the existence of banks which operate based on Islamic principles. To attract more customers both the bankers of conventional and Islamic banks should acquire information about factors which influence people in patronising their bank. This study investigates how Malaysian bank users select conventional banks, what services they want, also how they perceive Islamic banking. Results show that there are many similarities between Muslims and non-Muslims in their in their selection of banks and ulitization or services. A slight difference however, exists in their knowledge of Islamic banks

The existence of conventional banking profitability theories in the Islamic banking system

This study verifes the existence of profitability theories applied to conventional banks in Islamic banking. With some adjustments to Bourke's methodology, we find that determinants such as capital ratio, liquidity, interest rate and money supply have a similar effect on Islamic banks. There are also differences which could be used as evidence that Islamic banks are, in fact, distinct from conventional banks. Support is found for the risk-aversion theory and no evidence is found for the efficient-structure and expense-preference theories

Masalah dan cabaran pengilang padi Negeri Kedah

Industri pengilangan padi merupakan salah satu tonggak ekonomi negara yang penting. Justeru itu, isu serta masalah pengurusan yang dihadapi oleh pengilang perlu diketahui dan diberikan perhatian. Kajian ini menyoroti isu dan masalah pengurusan pengilang padi dari beberapa sudut dengan menjadikan populasi pengilang Negeri Kedah sebagai subjek kajian. Hasil kajian menonjolkan beberapa cabaran yang dihadapi oleh pengilang. Antara yang paling ketara ialah masalah pengaruh persekitaran makro kesan dari pengkorporatan BERNAS terhadap pengilang yang tidak bernaung di bawah BERNAS (BSPB) dan peningkatan kos operasi yang dihadapi oleh kilang yang bernaung di bawah Skim Pengilang Bumiputera (SPB). namun begitu, pengilang secara amnya menunjukkan yang meraka berpuas hati dengan amalan pengurusan, pengeluaran, kewangan dan pemasaran yang mereka amalkan sekarang. Ini menunjukkan ketidakecenderungan pengurus untuk mengurus kilang ke tahap yang lebih baik walaupun mereka merasai bahang persaingan dalam industri pengeluaran beras kini. Berdasarkan temuan kajian, beberapa saranan bagi meningkatkan industri pengeluaran beras di Negeri Kedah telah dicadangkan

The Relationship between Inefficiency, Risk and Capital Evidence from Commercial Banks in ASEAN

This study examines the relationship between inefficiency, risk and capital in ASEAN banking. We test whether bank inefficiency is related to risk taking and its capital position. In this study, measures of inefficiency, risk, and capital are based on accounting ratios. Data for the study includes eight countries in Association of South East Nations (ASEAN): Indonesia, Malaysia, Thailand, the Philippines, Singapore, Cambodia, Brunei and Vietnam. The panel data is taken from Bankscope database for the period 2003 to 2008. A three-stage least squares (3SLS) method is employed to capture endogeneity between inefficiency, risk, and capital and to avoid simultaneous bias for estimated coefficients when they are estimated separately. In the first stage of analysis, INEFF is regressed against CAP, RISK, SIZE and OBSTA. In the second stage of analysis, RISK is regressed against CAP, INEFF, SIZE and NLTA. In the third stage of analysis, CAP is regressed against RISK, INEFF, SIZE, ROA and IRC. In the inefficiency equation, the results indicate that CAP and SIZE are negatively related to inefficiency. However, RISK, surprisingly, is not significant. On the risk equation, the results indicate that CAP and INEFF are negatively related with risk. On the capital equation, there is negative relationship between CAP and RISK but not with INEFF. Keywords: risk, capital, inefficiency, 3 stage least squares method, ASEAN bankin

Trade Credit Management Practices of Malaysian Small and Medium-Sized Enterprises in the Manufacturing Sector

Considered as the engine of growth, small and medium-sized enterprises (SMEs) in Malaysia are heavily assisted and supported by various government agencies. Nonetheless, previous studies indicated that SMEs were facing many problems, where the most common finance-related problem was the lack of financing. However, the existence of various sources of financing in the market raised doubt as to whether the lack of funding is real or a myth. It is suspected that the problem for SMEs in Malaysia is not with the availability of funds, but the management of the funds obtained. Hence, this study focuses on the management of receivables, as they constitute a substantive component of company assets. This study centres on the trade credit management practices of Malaysian SMEs in the manufacturing sector, since this sector is a dominant contributor to the Malaysian SMEs’ total output. Specifically, the research objectives are (1) to compile the profile of, and investigate, the trade credit management practices of SMEs in the manufacturing sector; and (2) to identify factors (company characteristics) that might influence the trade credit management practices. To accomplish the research objectives, data on 214 manufacturing SMEs were collected from two different sources. Non-financial data was collected using mail questionnaires while the financial data were obtained from a private credit information agency. Both these primary and secondary data were later matched and used for analysis. First, descriptive analyses were performed to present the profile of practices adopted by SMEs in managing their trade credit. Then, bivariate associative analyses were conducted between the credit management practices and company characteristics using the Mann-Whitney, chi-square, Kruskal-Wallis and Spearman’s rank correlation tests. Next, trade credit management practice variables that showed associations with multiple company characteristics were further analysed as the dependent variables under multivariate settings. Multiple and logistic regressions were used for this purpose. The study provides a broad view of the SMEs’ trade credit management practices and finds them to be not very sophisticated. Thus, the study identifies some aspects that should be addressed to overcome this lack of sophistication. In addition, the study also identifies some of the company characteristics that may have some influence on the SMEs’ credit management practices. The study provides many implications that illustrate the SMEs’ lack of awareness and understanding on the importance of the various credit functions. Therefore, one of the recommendations suggested is to provide training for SMEs to increase knowledge and skills in managing trade credit. The study also proposes the establishment of a cooperative for SMEs, to be initiated and run, either by the SMEs themselves, or one of the related government agencies