By Muhamad Nadratuzzaman Hosen & Muhammad Dadi Sutisna
Abstract
The objective of this study is to measure the efficiency level of Shariah banks and to investigate the eterminant factors which influence the level of efficiency. In terms of scope of the research. Shariah banks included in this research are all full-fledged Shariah banks and Shariah windows of conventional banks in Indonesia. The time frame of this research was during the period of 2006-2008, the data used in this research are the data of published annual report of the financial statements (balance sheets and income statements) of Shariah banks in Indonesia. This research applies stochastic frontier approach (SFA) which is well known as parametric approach to measure efficiency using panel data of multiple inputs and outputs. The result of this research is that the efficiency of Shariah banks using the intermediary approach for the period of 2006-2008 has decreased each year. While the level of efficiency of Shariah banking using the production approach during the period of 2006-2008 fluctuated each year.
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