Measuring the Efficiency of Sharia Business Units of Indonesian Private Banks: A Data Envelopment Analysis Approach

With the development of sharia banks, one of the effects that occurs is the existence of competition among sharia banks. The objective of this study is then to analyze the efficiency of sharia business units of private banks in Indonesia. Understanding the efficiency is important because if banks perform consistently with full efficiency, the less inputs they use, the larger output they achieve. The output is measured by total earning asset, while the inputs used are total deposit and total operating costs. A data envelopment analysis with input-oriented and variable returns-to-scale is used to accomplish the objective. Result shows that among seven sharia business units under-investigated, three of them are considered as the most efficient