Abstract:

Six rapid growth markets (QISMUT as abbreviated from Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey) will play an important role in the globalization of the Islamic banking industry. Two thirds of the 38 million Islamic bank customers in the world reside in QISMUT countries. Having a wide pool of intellectual capital and funds, these countries may well be the drivers of a growth wave in current and new markets.   This study compares the scale efficiency using a set of indicators generated from the financial statements of 55 Islamic banks operating in QISMUT countries. 6 Islamic banks operating in Qatar, 15 in Indonesia, 11 in Saudi Arabia, 13 in Malaysia, 7 in UAE, and 3 in Turkey were included in the analysis involving the period between 2012 and 2016. Data Envelopment Analysis (DEA) was used in the efficiency measurements while the Malmquist Total Factor Productivity Index was used to measure the total factor productivity change. Half of these QISMUT Islamic banks meet the technical productivity (CCR) value. In other words, half of these QISMUT Islamic banks are able to use their Total Assets and Total Equities efficiently. When QISMUT countries are considered as a whole, it was found that Technical Efficiency Change (EFFCH) value was never recorded above 1 for any time period. It was found that the Islamic Banks of QISMUT countries are unlikely to reach their production limit. 

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