THE COMPARATIVE EFFICIENCY OF ISLAMIC MICRO FINANCE AND CONVENTIONAL MICRO FINANCE INSTITUTIONS IN SECULAR COUNTRIES: EVIDENCE FROM INDIA

Even though the Islamic micro finance is popular in Muslim majority countries, it is in very nascent stage in most of the third world secular countries. Among them, however, India is showing the soaring interest to implement Islamic finance system amid the tight regulatory and legal hurdles. At present Islamic micro finance institutions are getting popularized in the country by the effective initiation by the different nongovernmental organizations. Therefore this study is the attempt to find out the technical, pure technical and scale efficiencies of Islamic and conventional micro finance institutions and to compare these efficiency score between both types of organizations by using Data Envelopment Analysis and Independent t test in the data which is collected from 30 institutions from each stream. Thus the study checks whether Islamic micro finance is a successful and viable option in the secular third world countries. As per the results, the efficiency of Islamic micro finance institutions is higher than the conventional counterparts in number and average. The independent t test proves that in majority of the cases, there is no significant difference between the efficiency scores of both institutions; hence it gives a positive signal to the Islamic finance in the country and a good implication in the policy level. The result is a motivating factor for other secular third world countries to continue with and to introduce Islamic finance in their respective countries

کلیدواژه ها:

Islamic Micro finance ، Data Envelopment Analysis ، Constant and variable return to scale ، Input and output methods