An Analysis Of The Islamic Bank Efficiency

Islamic finance is a financial system with unique idea which is in accordance with Islam principles. It prohibits the interest, encourages entity transactions, advocates risk-sharing and benefit-sharing, rejects speculative practice and bans activities involving arms, porn, gambling and pork, etc.This thesis begins with domestic development background of Islamic finance and is followed by an introduction of Islamic financial system, the operation mode, financial instruments and developing trend of Islamic bank.19 of 36 worldwide islamic banks are selected for a following study on the efficiency of Islamic Banks in terms of time, size, region and degree of islamization by using DEA method. Some significant results are obtained as follows. Firstly, financial crisis has no significant impact on islamic finance. High degree of islamization produces a more steady islamic financial system. Despite of larger fluctuations, two-track-systems pan-islamic banks have higher comprehensive efficiency.Secondly, the efficiency of small pure islamic banks is far higher than small pan-islamic banks, the efficiency of large pure islamic banks is lower than large pan-islamic banks. Large pure islamic banks has a high increase on its efficiency with the accumulation of technique and management and overtake the large pan-islamic banks after financial crisis. Thirdly, the efficiency of non-mideast islamic banks is gradually beyond the Mideast islamic banks which implies that the islamic financial centre is moving to the east.In current circumstance, Chinese goverment should focus on establishing suitable islamic financial regulatory framework and tax system, training and introducing Islamic finance compound talents for developing islamic finance. Trying to issue islamic bonds and private equity funds in a short time and establishing sino-foreign joint islamic banks in china are other measures to be considered. In addition, Chinese banks can adopt islamic markets strategies to promote the proper islamization in foreign.