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Which is more important in terms of Profitability of Islamic banks: Bank Specific factors or Macroeconomic factors? An Empirical Study on Malaysian Islamic Banks
European Journal of Islamic Finance
View Archive Info| Field | Value | |
| Title |
Which is more important in terms of Profitability of Islamic banks: Bank Specific factors or Macroeconomic factors? An Empirical Study on Malaysian Islamic Banks
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| Creator |
Chowdhury, Mohammad Ashraful Ferdous; Assistant Professor, Department of Business Administration, Shahjajalal University of Science & Technology, Sylhet, Bangladesh |
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| Subject |
Endogenous, Exogenous, Determinants, Financial Performance, Islamic Banks, ROA, Efficiency ratios, Equity finance, credit risk, Liquidity risk, inflation, gross savings on national income.
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| Description |
Studies of Islamic banks’ profitability are an important tool towards improving performance, evaluating bank operations and determining management plan to help in increasing the chance for the banks to survive in competitive markets. The present study seeks to fill a demanding gap in the literature by providing new empirical evidence on the factors that influence the profitability of the Islamic banking sector in Malaysia. The research thus conducts a comparative analysis of the determinants of the profitability of Islamic banks operating in Malaysia. The Pooled Ordinary Least Square method is employed using annual data from the period 2007 to 2013 on 11 Islamic banks in Malaysia. In order to evaluate the financial performance of these Islamic banks the profitability are measured using the Return on Assets (ROA) indicator. The empirical findings of study reveals that endogenous factors such as the efficiency ratios (overhead costs) is negatively and statistically significant to the profitability of the Islamic bank’s performance, while equity financing is positive and statistically significant to the profitability of Islamic banks. The Credit risks and Liquidity risks factors are insignificant on the performance of the Islamic banks. On the other hand, exogenous factors such as inflation have a positive and statistically significant impact on the return on assets whereas savings on gross national income has a statistically significant and negative impact on the performance of Islamic banks.
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| Publisher |
University of Turin - Italy
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| Date |
2015-06-19
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
http://www.ojs.unito.it/index.php/EJIF/article/view/922
10.13135/2421-2172/922 http://www.ojs.unito.it/index.php/EJIF/article/download/922/818 |
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| Source |
European Journal of Islamic Finance; No 2 (2015): EJIF - European Journal of Islamic Finance, 2, 2015
European Journal of Islamic Finance; No 2 (2015): EJIF - European Journal of Islamic Finance, 2, 2015 2421-2172 |
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| Language |
eng
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| Relation |
http://www.ojs.unito.it/index.php/EJIF/article/view/922/818
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