Abstract
While operating in competition with conventional banks,
Islamic banks need to push up the returns to depositors so that they could
attract funds. If an Islamic bank optimizes its investment portfolio to
maximize deposit returns, it might have increasing access to the supply of
deposit funds. Unlike other studies, which consider return to deposit as
a cost, this study considers it as means to public benefit. It has used all
53 known full-fledged Islamic banks operating in Pakistan, Malaysia and
MENA countries in a panel stochastic frontier analysis for data between
2001 and 2015 and confirmed that Islamic banks are approximately 26%
optimized. Mud.
¯arabah investment presents itself as the best candidate for
boosting the efficiency. Also, if the market is favorable in terms of banking
profits, market return rate of investment, banking sector development and
risks, then efficiency could be increased.
Rukhsana Kalim, Noman Arshed. (2018) What Determines the Social Efficiency of Islamic Banking Investment Portfolio?, Journal of Islamic Business and Management, Volume 8, Issue 2.
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