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http://dx.doi.org/10.13106/jafeb.2020.vol7.no12.721

The Determinants of The Bank Regulation and Supervision on The Efficiency of Islamic Banks in Different Country's Income Level  

MOHD NOOR, Nor Halida Haziaton (Faculty of Business and Management, UiTM Kelantan)
BAKRI, Mohammed Hariri (Faculty of Technology Management and Technopreneurship, Universiti Teknikal Malaysia)
WAN YUSOF, Wan Yusrol Rizal (Faculty of Business and Management, UiTM Kelantan)
MOHD NOOR, Nor Raihana Asmar (Faculty of Business and Management, UiTM Kelantan)
ABDULLAH, Hasni (Malaysian Academy of SME & Entrepreneurship Development, UiTM Shah Alam)
MOHAMED, Zulkifli (Faculty of Business and Management, UiTM Kelantan)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.12, 2020 , pp. 721-730 More about this Journal
Abstract
This study investigates the impact of the country's governance on the revenue efficiency of 108 Islamic banks from 26 countries offering Islamic banking and finance products services. The technical efficiencies of individual Islamic banks have been analyzed using the Data Envelopment Analysis method. The data will be pooled across the selected countries and utilize the intermediation approach. The Ordinary Least Square estimation method is employed to examine the impact of country supervision and regulation on the technical efficiency of Islamic banks. As robustness check, the study examines the impact of the level of bank regulations and supervision on the efficiency of Islamic banks operating in different income-level countries. The results found that the stricter the supervisory power, the less strict capital requirement, the tighter the restrictions on non-banking activities, and the stricter the private monitoring enhance statistically significantly the level of efficiency of Islamic banks. In upgrading the regulations and supervision of the Islamic banks, the existing regulatory framework based on the Basel Committee on Banking Supervision (BCBS) must be complemented with the prescriptions on Islamic banking or Shariah compliance diligently, so that the Islamic banks could be regulated accurately and further improve the technical efficiency of their operations.
Keywords
Supervision; Bank Regulation; Islamic Banks; Data Envelopment Analysis; Country Income Level;
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Times Cited By KSCI : 6  (Citation Analysis)
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