Open AccessFINANCIAL AND SOCIAL EFFICIENCY ON INDONESIAN ISLAMIC BANKS
Author(s) -
Aam Slamet Rusydiana,
Lina Marlina
Publication year - 2019
Publication title -
journal of islamic monetary economics and finance
Language(s) - English
Resource type - Journals
eISSN - 2460-6146
pISSN - 2460-6618
DOI - 10.21098/jimf.v5i3.1154
Subject(s) - indonesian , islam , quadrant (abdomen) , business , accounting , financial market efficiency , value (mathematics) , finance , actuarial science , financial ratio , statistics , geography , mathematics , medicine , philosophy , linguistics , archaeology , pathology
This paper explores financial and social efficiency in one assessment framework. Inorder to measure efficiency level of Islamic Banking Industry, this study uses DataEnvelopment Analysis (DEA) and Free Disposal Hull (FDH) methods. The resultsshow that the level of financial efficiency of Islamic banks in Indonesia from 2013 to2018 tends to decrease. On the contrary, the level of social efficiency of Islamic banksin Indonesia has a tendency to increase. Furthermore, the value of social efficiency ofIslamic banks in Indonesia was relatively lower compared to the value of financialefficiency. Within the Financial-Social Efficiency Quadrant framework, the studyclassified two Islamic banks in quadrant 1, three in quadrant 2, two in quadrant 3,and four in quadrant 4. It is imperative for Islamic banks that are in the low level of‘social efficiency’ to develop a policy to keep in line with the five factors of maqashidsharia apart of maintaining efficiency in order to reach maslahah. For the regulators,the social efficiency measurement framework could be an alternative in consideringIslamic bank performance beyond financial efficiency.