Modeling the Relative Efficiency of Islamic Banks in Bahrain Using Data Envelopment Analysis

This research evaluated the performance of Bahrain's Islamic retail banks from 2017 to 2019. The study uses data envelopment analysis (DEA) models to assess the relative efficiency of banks. Six Islamic banks are included in the sample. Total deposits, fixed assets, and owner's equity were picked as inputs, and facility credits, total operational revenue, and net profit were chosen as outputs. The study identified input and output inefficiencies in banks that weren't doing well and proposed input and output targets that would aid banks in improving their performance. The key advantage is that this research should add to existing studies on the effectiveness of Islamic banks by providing banks, regulators, investors, and researchers with additional information. Policymakers could benefit from knowing how specific factors affect efficiency since it could help them advocate, disapprove, or change a policy.