A comparative study of the relative efficiency of conventional and Islamic pawnshop

The productive efficiency of pawnshops concerning their ability to provide and distribute funds to the society (marketability efficiency) is investigated in the study. Data Envelopment Analysis (DEA) using CCR model and BCC model is used to perform efficiency analysis of conventional and Islamic pawnshops. The most productive scale size for pawnshops is also investigated as well as a comparison of the mean efficiency of conventional and Islamic pawnshops is made using independent tests. The CCR and BCC efficiency score analyses shows that 5 and 11 pawnshops respectively out of 39 pawnshops in the study are relatively efficient. Of these 39 pawnshops, 30 (76.90%) showed increasing returns-to-scale, 5 (12.90%) showed constant returns-to-scale and 4 (10.20%) showed decreasing returns-to-scale. These results suggest that to increase the efficiency of pawnshops in providing and distributing funds to society, the managers’ capability to utilize pawnshops’ given resources needs to be enhanced