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The impact of financing contracts on the profitability of Islamic banks

This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai’ Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai’ (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for...

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Main Authors: Maisyarah Stapah @ Salleh,, Bayu Taufiq Possumah,, Nizam Ahmat,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2021
Online Access:http://journalarticle.ukm.my/18805/1/jeko_553-11.pdf
http://journalarticle.ukm.my/18805/
https://www.ukm.my/jem/issue/v55i3/
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spelling my-ukm.journal.188052022-06-23T08:48:37Z http://journalarticle.ukm.my/18805/ The impact of financing contracts on the profitability of Islamic banks Maisyarah Stapah @ Salleh, Bayu Taufiq Possumah, Nizam Ahmat, This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai’ Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai’ (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for bank and market-specific factors, the results indicated that AITAB exerted significant impact on the NPM. The paper further found that risk aversion, operating cost, liquidity and asset quality improves the NPM. In addition, the results show that the market structure influence the level of NPM. The Islamic banks may control these variables in setting for their preferred NPM level. Finally, the banks may need to carefully examine the types of financing contracts offered as they have different characteristics and may affect NPM. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/18805/1/jeko_553-11.pdf Maisyarah Stapah @ Salleh, and Bayu Taufiq Possumah, and Nizam Ahmat, (2021) The impact of financing contracts on the profitability of Islamic banks. Jurnal Ekonomi Malaysia, 55 (3). pp. 149-164. ISSN 0127-1962 https://www.ukm.my/jem/issue/v55i3/
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai’ Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai’ (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for bank and market-specific factors, the results indicated that AITAB exerted significant impact on the NPM. The paper further found that risk aversion, operating cost, liquidity and asset quality improves the NPM. In addition, the results show that the market structure influence the level of NPM. The Islamic banks may control these variables in setting for their preferred NPM level. Finally, the banks may need to carefully examine the types of financing contracts offered as they have different characteristics and may affect NPM.
format Article
author Maisyarah Stapah @ Salleh,
Bayu Taufiq Possumah,
Nizam Ahmat,
spellingShingle Maisyarah Stapah @ Salleh,
Bayu Taufiq Possumah,
Nizam Ahmat,
The impact of financing contracts on the profitability of Islamic banks
author_facet Maisyarah Stapah @ Salleh,
Bayu Taufiq Possumah,
Nizam Ahmat,
author_sort Maisyarah Stapah @ Salleh,
title The impact of financing contracts on the profitability of Islamic banks
title_short The impact of financing contracts on the profitability of Islamic banks
title_full The impact of financing contracts on the profitability of Islamic banks
title_fullStr The impact of financing contracts on the profitability of Islamic banks
title_full_unstemmed The impact of financing contracts on the profitability of Islamic banks
title_sort impact of financing contracts on the profitability of islamic banks
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2021
url http://journalarticle.ukm.my/18805/1/jeko_553-11.pdf
http://journalarticle.ukm.my/18805/
https://www.ukm.my/jem/issue/v55i3/
_version_ 1736834968285347840
score 13.211869

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