Measures of Efficiency in the Takaful Industry of Bangladesh-A Non-Parametric Approach

Jesmin ISLAM, Zahid Bhuiyan

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    Abstract

    This study aim is to examine the efficiency in the Takaful industry of Bangladesh. Data Envelopment Analysis (DEA) is used to explore the contributions of technical and efficiency changes to the growth of productivity in the Takaful industries of Bangladesh by using descriptive statistics such as mean, median, standard deviation, minimum & maximum and efficiency (Constant Returns to Scale & Variable Returns to Scale) applying the generalized output-oriented Malmquist index for the years 2009-2011. The output-input data consists of a panel of all (06) Takaful companies in Bangladesh. This study utilizes two inputs and two outputs, namely, commission and management as well as premium and net investment income, respectively. In the DEA technique, efficiency is measured by the Malmquist index. The Malmquist efficiency measures have two components: the efficiency change and technical change index. Efficiency change is again combined by pure efficiency and scale efficiency. It is found that, on geometric mean, the TFP of the Takaful industry is mainly due to both efficiency and technical changes where the main source of the efficiency change is scale efficiency rather than pure efficiency. Our finding indicates that in the Takaful industry of Bangladesh, the smaller the size of the companies, the higher the probability for the companies to be more efficient in utilizing their inputs to generate more outputs. We believe our work is beneficial for researchers and practitioners to better understand the Bangladeshi Islamic insurance industry
    Original languageEnglish
    Pages (from-to)163-173
    Number of pages11
    JournalEuropean Journal of Business and Management
    Volume5
    Issue number11
    Publication statusPublished - 2013

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    Industry
    Efficiency change
    Bangladesh
    Technical change
    Malmquist index
    Scale efficiency
    Data envelopment analysis
    Median
    Standard deviation
    Returns to scale
    Efficiency measures
    Statistics
    Income
    Variable returns to scale
    Geometric mean
    Productivity
    Insurance industry
    Premium
    Malmquist

    Cite this

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    abstract = "This study aim is to examine the efficiency in the Takaful industry of Bangladesh. Data Envelopment Analysis (DEA) is used to explore the contributions of technical and efficiency changes to the growth of productivity in the Takaful industries of Bangladesh by using descriptive statistics such as mean, median, standard deviation, minimum & maximum and efficiency (Constant Returns to Scale & Variable Returns to Scale) applying the generalized output-oriented Malmquist index for the years 2009-2011. The output-input data consists of a panel of all (06) Takaful companies in Bangladesh. This study utilizes two inputs and two outputs, namely, commission and management as well as premium and net investment income, respectively. In the DEA technique, efficiency is measured by the Malmquist index. The Malmquist efficiency measures have two components: the efficiency change and technical change index. Efficiency change is again combined by pure efficiency and scale efficiency. It is found that, on geometric mean, the TFP of the Takaful industry is mainly due to both efficiency and technical changes where the main source of the efficiency change is scale efficiency rather than pure efficiency. Our finding indicates that in the Takaful industry of Bangladesh, the smaller the size of the companies, the higher the probability for the companies to be more efficient in utilizing their inputs to generate more outputs. We believe our work is beneficial for researchers and practitioners to better understand the Bangladeshi Islamic insurance industry",
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    Measures of Efficiency in the Takaful Industry of Bangladesh-A Non-Parametric Approach. / ISLAM, Jesmin; Bhuiyan, Zahid.

    In: European Journal of Business and Management , Vol. 5, No. 11, 2013, p. 163-173.

    Research output: Contribution to journalArticle

    TY - JOUR

    T1 - Measures of Efficiency in the Takaful Industry of Bangladesh-A Non-Parametric Approach

    AU - ISLAM, Jesmin

    AU - Bhuiyan, Zahid

    PY - 2013

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    AB - This study aim is to examine the efficiency in the Takaful industry of Bangladesh. Data Envelopment Analysis (DEA) is used to explore the contributions of technical and efficiency changes to the growth of productivity in the Takaful industries of Bangladesh by using descriptive statistics such as mean, median, standard deviation, minimum & maximum and efficiency (Constant Returns to Scale & Variable Returns to Scale) applying the generalized output-oriented Malmquist index for the years 2009-2011. The output-input data consists of a panel of all (06) Takaful companies in Bangladesh. This study utilizes two inputs and two outputs, namely, commission and management as well as premium and net investment income, respectively. In the DEA technique, efficiency is measured by the Malmquist index. The Malmquist efficiency measures have two components: the efficiency change and technical change index. Efficiency change is again combined by pure efficiency and scale efficiency. It is found that, on geometric mean, the TFP of the Takaful industry is mainly due to both efficiency and technical changes where the main source of the efficiency change is scale efficiency rather than pure efficiency. Our finding indicates that in the Takaful industry of Bangladesh, the smaller the size of the companies, the higher the probability for the companies to be more efficient in utilizing their inputs to generate more outputs. We believe our work is beneficial for researchers and practitioners to better understand the Bangladeshi Islamic insurance industry

    KW - Data Envelopment Analysis

    KW - Takaful

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    KW - Technical Efficiency

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