The name is absent

Review of Islamic Economics, Vol. 8, No. 2, 2004

also measures the impact of technical change over time. The main
conclusions derived from the exercise are:

i. The most striking conclusion from the ranking Table 2 is that
the smallest bank in Kuwait is consistently the most efficient of all
banks in the country.

2. Going through their Table 3, that provides efficiency scores
over the estimation period, one finds an unmistakable upward trend
in the cost efficiency of banks, probably because of decreasing cost of
funds.

3. As opposed to what Saaid et al. claimed for Sudan, the
technical inefficiency of banks in Kuwait is consistently lower than
their allocative inefficiency over the estimation period, suggesting that
the main source of cost inefficiencies is presumably regulatory not
managerial in nature: Kuwaiti banks do a better job in utilizing
available inputs than in choosing the proper input mix.

4. Scale efficiency is also consistently higher than pure technical
efficiency in Kuwaiti banks over the period of study.

5. Finally, Kuwaiti banks seem to have improved in terms of all
types of efficiency over the period save 1996.

The work of Darrat et al. is short but well organized and
adequately documented. Their explanations are clear, their
conclusions fruitful. The various appendices are an integral part of
their argument: they are enlightening and above all lend transparency
to their work. However, there are limitations as well. For a work
presented in 2002, the period of study 1994-1997 looks too far back
into the past; their conclusions are at best monumental. Finally, the
work lacks an Islamic dimension, or should one assume that there are
no banks in Kuwait run on an interest-free basis?

VI. Efficiency Criteria and Social Priorities

It would be naïve to dispute the relevance of cost efficiency for Islamic
banks, but we shall argue that it need not be the only parameter for
assessing their performance. In mainstream economics, where in
principle the promotion of private (individual) self-interest is
considered primal for enhancing social well-being, efficiency criteria
for PUs, including banks, had to remain focused on profit, the reason

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