A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia

Purpose – The purpose of this paper is to investigate the efficiency of selected conventional and Islamic unit trust companies in Malaysia during the period 2002 to 2005. Design/methodology/approach – The paper adopts Data Envelopment Analysis (DEA) to investigate efficiency, as measured by the Mal...

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Main Authors:	Md Saad, Norma, Abd. Majid, M. Shabri, Kassim, Salina, Hamid, Zarinah, Mohd. Yusof, Rosylin
Format:	Article
Language:	English
Published:	Emerald Group Publishing 2010
Subjects:	HG4301 Trust services
Online Access:	http://irep.iium.edu.my/1376/ http://irep.iium.edu.my/1376/ http://irep.iium.edu.my/1376/ http://irep.iium.edu.my/1376/1/A_comparative%5B1%5D.pdf

id	iium-1376
recordtype	eprints
spelling	iium-13762012-03-13T06:51:26Z http://irep.iium.edu.my/1376/ A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia Md Saad, Norma Abd. Majid, M. Shabri Kassim, Salina Hamid, Zarinah Mohd. Yusof, Rosylin HG4301 Trust services Purpose – The purpose of this paper is to investigate the efficiency of selected conventional and Islamic unit trust companies in Malaysia during the period 2002 to 2005. Design/methodology/approach – The paper adopts Data Envelopment Analysis (DEA) to investigate efficiency, as measured by the Malmquist index, which is decomposed into two components: efficiency change and technical change indexes. Findings – The study indicates that technical efficiency is the main contributor to enhancing the efficiency of the Malaysian unit trust industry. In addition, the larger the size of the unit trust companies, the more inefficient the performance. In comparing the efficiency of unit trust companies, the study finds that some of the Islamic unit trust companies perform better than their conventional counterparts. Research limitations/implications – The study is limited to five Islamic unit trust companies. Thus, the findings of this study are indicative, but inconclusive for the unit trust industry as a whole. Practical implications – The results have two important implications for both conventional and Islamic unit trust companies in Malaysia. First, the deterioration of total factor productivity (TFP) in the unit trust industry in Malaysia is due to the deficiency of innovation in technical components. Second, the size of the unit trust companies has an adverse effect on the TFP performance. Originality/value – The contribution of this study is that it analyzes the efficiency of the two types of unit trust industry which are important and relevant for Malaysia. This significance arises from the dual financial system, in which the Islamic unit trust companies operate in parallel with their conventional counterparts. The comparison sheds some light on the performance of the Islamic unit trust companies, whose operations are based on profit-sharing, in contrast to the conventional unit trust companies. Emerald Group Publishing 2010 Article PeerReviewed application/pdf en http://irep.iium.edu.my/1376/1/A_comparative%5B1%5D.pdf Md Saad, Norma and Abd. Majid, M. Shabri and Kassim, Salina and Hamid, Zarinah and Mohd. Yusof, Rosylin (2010) A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia. International Journal of Managerial Finance, 6 (1). pp. 24-47. ISSN 1743-9132 http://www.emeraldinsight.com/journals.htm?issn=1743-9132&volume=6&issue=1&articleid=1839518 10.1108/17439131011015779
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG4301 Trust services
spellingShingle	HG4301 Trust services Md Saad, Norma Abd. Majid, M. Shabri Kassim, Salina Hamid, Zarinah Mohd. Yusof, Rosylin A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia
description	Purpose – The purpose of this paper is to investigate the efficiency of selected conventional and Islamic unit trust companies in Malaysia during the period 2002 to 2005. Design/methodology/approach – The paper adopts Data Envelopment Analysis (DEA) to investigate efficiency, as measured by the Malmquist index, which is decomposed into two components: efficiency change and technical change indexes. Findings – The study indicates that technical efficiency is the main contributor to enhancing the efficiency of the Malaysian unit trust industry. In addition, the larger the size of the unit trust companies, the more inefficient the performance. In comparing the efficiency of unit trust companies, the study finds that some of the Islamic unit trust companies perform better than their conventional counterparts. Research limitations/implications – The study is limited to five Islamic unit trust companies. Thus, the findings of this study are indicative, but inconclusive for the unit trust industry as a whole. Practical implications – The results have two important implications for both conventional and Islamic unit trust companies in Malaysia. First, the deterioration of total factor productivity (TFP) in the unit trust industry in Malaysia is due to the deficiency of innovation in technical components. Second, the size of the unit trust companies has an adverse effect on the TFP performance. Originality/value – The contribution of this study is that it analyzes the efficiency of the two types of unit trust industry which are important and relevant for Malaysia. This significance arises from the dual financial system, in which the Islamic unit trust companies operate in parallel with their conventional counterparts. The comparison sheds some light on the performance of the Islamic unit trust companies, whose operations are based on profit-sharing, in contrast to the conventional unit trust companies.
format	Article
author	Md Saad, Norma Abd. Majid, M. Shabri Kassim, Salina Hamid, Zarinah Mohd. Yusof, Rosylin
author_facet	Md Saad, Norma Abd. Majid, M. Shabri Kassim, Salina Hamid, Zarinah Mohd. Yusof, Rosylin
author_sort	Md Saad, Norma
title	A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia
title_short	A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia
title_full	A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia
title_fullStr	A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia
title_full_unstemmed	A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia
title_sort	comparative analysis of the performance of conventional and islamic unit trust companies in malaysia
publisher	Emerald Group Publishing
publishDate	2010
url	http://irep.iium.edu.my/1376/ http://irep.iium.edu.my/1376/ http://irep.iium.edu.my/1376/ http://irep.iium.edu.my/1376/1/A_comparative%5B1%5D.pdf
first_indexed	2023-09-18T20:08:41Z
last_indexed	2023-09-18T20:08:41Z
_version_	1777407331130146816

A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia

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