Efficiency of the Islamic Banking Sector: Evidence from Two-Stage DEA Double Frontiers Analysis

This paper examines the multi-dimensional efficiency of Islamic banking sector and its determinants, including impacts COVID-19 pandemic. To do that, we use a novel approach two-stage data envelopment analysis (DEA) double frontiers to evaluate overall 79 banks across 16 countries (2005–2020). In first-stage analysis, found that experienced an increasing trend in performance, even during recent pandemic, although it varied countries. Our empirical results second-stage further showed economic development can help both withstand pandemic improve performance their (Islamic) system. This, turn, could speed up recovery process global economy. Since there is evidence resilient expected this will be driving force such recovery.