Efficiency of Islamic and Conventional Banks in Bangladesh: Empirical Estimation Using Models

This book empirically investigates and compares the efficiency of Islamic and conventional banks in Bangladesh using different frontier approaches. The results show that both conventional and Islamic banks have been improving and converge to the highest level of efficiency. Results also show that conventional banks are slightly more efficient than Islamic banks but Islami Bank Bangladesh Limited (IBBL) alone is the most efficient in most categories. Study also finds that the Bangladeshi Islamic banking industry, especially IBBL, has in terms of assets, deposits, income, remittance collection and financing base, and contribution to Bangladesh economy have grown rapidly over the study period (2002 to 2007). Although, the ROA, ROE and non-funded income of IBBL is proportionately lower than other studied banks. Therefore, Islamic banks should redirect their marketing and communication strategies to focus more on targeting floating customers. The shortage in human resource should also be given serious attention with short term and long term strategies with training and development program.