Efficiency of the Middle East Banking Sector –A Non Parametric Approach: A Comparative Analysis between Islamic and Conventional Banks

Abstract

The main purpose of this paper is to examine the efficiency levels of Islamic Banks and Conventional Banks in the Middle East. Data Envelope Analysis (DEA) as a non parametric approach used to investigate the efficiency of both types of banks .Also, t-test used to examine whether there are significant differences of efficiency levels between Islamic Banks and Conventional Banks from 2001 till 2009.The results revealed that there is no significant differences in overall cost efficiency and overall technical efficiency between Islamic banks and conventional banks over the period 2001-2009 under both CRS, and VRS Models.