A Comparison of Efficiency of Islamic and Conventional Banks Using SFA Model (A Case Study: Selected Banks in the MENA Region)

Today, the tools and services provided in the Islamic framework have successfully encouraged economic firms to be active in this field. This can be due to the success of Islamic banking in competing with conventional banks in gaining their trust in the provision of services. In this study, to clarify this issue, the cost efficiency of banks has been measured and a comparison has been made between Islamic and conventional banks. The reason is that efficiency is an indicator that can provide an overview of activity results. Moreover, Islamic and conventional banks are both required to minimize the costs. To calculate the efficiency, the information of the banks of MENA region and STATA software was used for 188 banks from 2012 to 2016. Based on the results obtained, using the stochastic frontier analysis (SFA) method, it can be stated that Islamic banks in the region have been more efficient than conventional ones.