Cost Malmquist productivity analysis during the COVID-19 outbreak: evidence from the largest dual banking industry

Mohammad Alsharif
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Abstract

Purpose

This study attempts to comprehensively analyze the cost Malmquist productivity index of conventional and Islamic banks in Saudi Arabia, the largest dual banking sector in the world, during the COVID-19 pandemic.

Design/methodology/approach

This study employs the novel approach of cost Malmquist productivity index, which focuses on production costs, to measure the change in cost productivity so that the actual impact of the COVID-19 pandemic could be captured.

Findings

The Saudi Central Bank has successfully mitigated the impact of the COVID-19 epidemic on the Saudi banking sector by implementing several policies and services. This success is reflected in the large positive shift in the production frontier of Saudi banks. Moreover, it was found that Islamic Saudi banks were by far more productive than conventional Saudi banks during the COVID-19 pandemic. However, the total cost productivity index (CMPCH) of Islamic Saudi banks starts to decline sharply in the last quarter of 2022 compared to conventional Saudi banks, indicating that Islamic banks in Saudi Arabia are suffering the most from the tighter monetary policy recently implemented by the Saudi Central Bank.

Practical implications

The results provide insights for policymakers and investors on how different types of banks respond differently to economic crises and monetary policy changes. Targeted support measures may be needed to ensure all banks remain productive and efficient.

Originality/value

To the author’s knowledge, this is the first study to use this innovative methodology to assess the impact of COVID-19 on bank performance in a dual banking sector.

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COVID-19 爆发期间的成本马尔奎斯特生产率分析:来自最大的双重银行业的证据
目的 本研究试图全面分析沙特阿拉伯(世界上最大的双重银行业)传统银行和伊斯兰银行在 COVID-19 大流行期间的成本马尔奎斯特生产率指数。研究结果沙特中央银行通过实施多项政策和服务,成功缓解了 COVID-19 疫情对沙特银行业的影响。沙特银行的生产前沿发生了巨大的正向变化,这反映了这一成功。此外,研究还发现,在 COVID-19 大流行期间,沙特伊斯兰银行的生产率远远高于沙特传统银行。然而,与传统沙特银行相比,伊斯兰沙特银行的总成本生产率指数(CMPCH)在 2022 年最后一个季度开始急剧下降,这表明沙特的伊斯兰银行受沙特中央银行最近实施的紧缩货币政策的影响最大。可能需要采取有针对性的支持措施,以确保所有银行保持生产力和效率。
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来源期刊
CiteScore
7.90
自引率
9.70%
发文量
87
期刊介绍: ■Organisational design and methods ■Performance management ■Performance measurement tools and techniques ■Process analysis, engineering and re-engineering ■Quality and business excellence management Articles can address these topics theoretically or empirically through either a descriptive or critical approach. The co-Editors support articles that significantly bring new knowledge to the area both for academics and practitioners. The material for publication in IJPPM should be written in a manner which makes it accessible to its entire wide-ranging readership. Submissions of highly technical or mathematically-oriented papers are discouraged.
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