This paper is an extended version of our earlier study (Abd. Majid and
Maulana 2010) to further re-examine the relative efficiencies of
selected Islamic and conventional mutual funds companies in Indonesia
during the period 2004 to 2007 and their determinants. To measure their
efficiencies, the output-input data consisting of a panel of
conventional and Islamic mutual funds companies are empirically examined
based on the most commonly used non-parametric approach, namely, Data
Envelopment Analysis (DEA). It also attempts to investigate the
influence of the mutual funds companies' characteristics on efficiency
measures using the Generalized Least Square (GLS) estimation. The study
finds that, on average, the Indonesian mutual funds companies
experienced a decrease in Total Factor Productivity (TFP) growth. It is
mainly caused by a decline in both efficiency and technical
efficiencies, where the efficiency change is largely contributed by the
changes in pure efficiency rather than scale efficiency. Additionally,
the study also documents that the funds size negatively affects
efficiency. This indicates that due to its diseconomies of scale, a
larger mutual funds company is less efficient than a smaller funds
company. Finally, in comparing the efficiency of the mutual funds
companies, the study finds that, on average, the Islamic unit trust
companies perform more poorly than their conventional counterparts.
[ABSTRACT FROM AUTHOR]