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Efficient utilization of the resources as trust of the depositors is the first and foremost responsibility of the Islamic bank, as directed in . Efficiency in managing the cost of the bank is only aspect that bank can control which can lead to increase in income of bank and depositors. There is a vast literature on theoretical models of business cost minimization but in reality the situation is not promising. This paper aims to measure and compare the real cost efficiency of full-fledged Islamic banks operating in Pakistan between the years of 2003 to 2015, using the Panel Stochastic Frontier Approach (SFA). The results revealed that surprisingly the Islamic banks in Pakistan are only 36 percent cost efficient, which can be contributed to the challenges faced because of parallel Islamic & conventional banking system and the nature of support from the regulatory and economic system. While determining the factors for efficiency for banking, fixed effect estimates revealed that operating efficiency, asset utilization has a positive effect while profit margin has a negative effect on cost efficiency. This study concludes that Islamic banks are facing issues of excess liquidity, inadequate support from regulatory authorities and competition from the conventional banking system which are causing inefficiency in cost management.

This study empirically investigates the aid effectiveness debate in light of the Burnside-Dollar (2000) hypothesis that the recipient country’s policy environment is critical for aid effectiveness. Based on data from ten Asian countries for 1984–2015 and in line with Burnside and Dollar (2000), we construct a new composite policy index. Employing two-stage least squares to estimate the model, we find that aid had a negative impact on economic growth during the study period for these countries, thus refuting the Burnside-Dollar aid effectiveness hypothesis.

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The present study investigated the impact of monetary policy and globalization on inflation. The study utilized an updated measure of globalization along with two other dimensions i.e., de facto and de jure measure of globalization to examine the nature of the globalization-inflation relationship. It measures the impact of monetary policy variables on inflation, ignoring random shocks as these are considered minor fractions for the inconsistency of the policy instruments. The study also used the Hodrick Prescott filter to calculate the domestic output gap to assess the notion that the changes in the domestic output gap are still relevant to inflation variations in the presence of globalization. Structural modeling of dynamic heterogeneous panel data estimation technique, which accounts for endogeneity and serial correlation issues has also been employed. The results of the study confirm that both global and domestic factors have significant and descriptive power for domestic inflation. Furthermore, the interest rate is found to be a major nominal anchor to affect inflation. The results of panel causality showed that there exists bidirectional causality from inflation to interest rate, while mixed results were found for analyzing monetary aggregates, exchange rate, globalization, and domestic output gap relationships.