Measuring the Sudanese Islamic banks scale efficiency technological change and TFP growth using translog cost function

Abstract EN

-With few exceptions, studies on the performance of Islamic Banks that operate in either Muslim-ruled or non-Muslim-ruled countries are still scanty.

Hitherto, Darrat (1988), Yousefi et.

al.

(1997), Samad (1999), Ebrahim and Tan (2001) and Bashir (1999) are, among the few, actively engaged in measuring the performance of Islamic banks in countries like Tunisia, Iran, Malaysia, Brunei and Sudan.

The methods used to measure them are confined to the standard measurements such as financial ratios, data envelopment analysis and linear programming.

Recently, however, there are attempts being made to use other recently developed methods to measure the Islamic banks performance.

El-Zahi (2002), for example, used translog cost function to investigate the efficiency of the Sudanese Islamic Banks for the period 1989-98.

Darrat (1988) and Yousefi et.

al.

(1997), on the other hand, employed money demand function to study the impact of the presence of Islamic banks on monetary stability in Tunisia and Iran, respectively.

Although the above-mentioned studies have explicitly unraveled many untold stories and secrets about the Islamic banks’ strengths and weaknesses in terms of their efficiencies, contribution to a country’s monetary stability and managing the portfolios, and the efforts they made are indeed commendable, none have measured the banks’ scale and technological change effects, let alone its productivity growth.