Proceedings of 11 Asian Business Research Conference

Proceedings of 11th Asian Business Research Conference
26-27 December, 2014, BIAM Foundation, Dhaka, Bangladesh, ISBN: 978-1-922069-68-9
Jordanian National Banks and Their Foreign Peer: Efficiency
Comparative Approach
Jamal Al-Khasawneh and Mohammed Z. Shariff
Competition from over seas by well-established foreign banks became part of the banking sectors
that plays a positive role in economic growth. They had increased in the size and the number and have
significant role in emerging economies in recent years.
This paper aims to evaluate the efficiency of foreign banks comparatively to conventional banks in
Jordan where both types of banks are operating side by side. The non-parametric Data Envelopment
Analysis (DEA) is used to investigate the cost and revenue efficiency of Islamic and conventional banks
in Jordan over the period from 2000 to 2007. The results show that foreign banks have more cost
efficiency and less revenue efficiency than national banks. These findings can be justified by the small
size of foreign banks, and to their ability to invest their funds in foreign financial instruments that are less
risky and provide fixed income making foreign banks facing less challenging investment avenues.
Dr. Jamal Al-Khasawneh, Gulf University for Science and Technology, Kuwait. Email: [email protected]
Dr. Mohammed Z. Shariff, Gulf University for Science and Technology, Kuwait. Email: [email protected]