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Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail

The existence of Islamic banks that grow rapidly in every corner of the world has caused strong competition among them and other conventional banks in Malaysia. This requires the banks management to choose wisely on the determinants that make them to remain strong and relevant in the Islamic banking...

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Main Authors: Basir, Nur Liyana, Ismail, Rashidah
Format: Article
Language:English
Subjects:
Finance, Islamic
Online Access:https://ir.uitm.edu.my/id/eprint/81860/1/81860.PDF
https://ir.uitm.edu.my/id/eprint/81860/
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spelling my.uitm.ir.818602023-07-27T07:04:53Z https://ir.uitm.edu.my/id/eprint/81860/ Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail Basir, Nur Liyana Ismail, Rashidah Finance, Islamic The existence of Islamic banks that grow rapidly in every corner of the world has caused strong competition among them and other conventional banks in Malaysia. This requires the banks management to choose wisely on the determinants that make them to remain strong and relevant in the Islamic banking sector. The main purpose of this study is to predict the return on equity of some Islamic banks in Malaysia using forecast value of significant banking determinant. The significant banking determinants selected for the study include deposit ratio, operating efficiency and market concentration. The study utilized secondary data from year 2010 until year 2016 for 13 Islamic banks in Malaysia. Principal Component Analysis was applied in order to get internal and external significant determinants. The internal and external significant determinants are Bank Size and Gross Domestic Product. Then, Multiple Linear Regression was used to formulate the Bank Profit Model which shows the relationship between the Bank Size and GDP with Return on Equity. Next, Geometric Brownian Motion used to forecast the value of Bank Size and GDP. The forecast value was substitute into Bank Profit Model to calculate the Return on Equity for each bank. From the results of the study, management of bank can have focused on Bank Size and Gross Domestic Product in order to gain more profit. Besides, the Return on Equity for Islamic banks in this study in a range of 3 percent to 23.82 percent. Article PeerReviewed text en https://ir.uitm.edu.my/id/eprint/81860/1/81860.PDF Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail. pp. 1-11.
institution Universiti Teknologi Mara
building Tun Abdul Razak Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Mara
content_source UiTM Institutional Repository
url_provider http://ir.uitm.edu.my/
language English
topic Finance, Islamic
spellingShingle Finance, Islamic
Basir, Nur Liyana
Ismail, Rashidah
Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail
description The existence of Islamic banks that grow rapidly in every corner of the world has caused strong competition among them and other conventional banks in Malaysia. This requires the banks management to choose wisely on the determinants that make them to remain strong and relevant in the Islamic banking sector. The main purpose of this study is to predict the return on equity of some Islamic banks in Malaysia using forecast value of significant banking determinant. The significant banking determinants selected for the study include deposit ratio, operating efficiency and market concentration. The study utilized secondary data from year 2010 until year 2016 for 13 Islamic banks in Malaysia. Principal Component Analysis was applied in order to get internal and external significant determinants. The internal and external significant determinants are Bank Size and Gross Domestic Product. Then, Multiple Linear Regression was used to formulate the Bank Profit Model which shows the relationship between the Bank Size and GDP with Return on Equity. Next, Geometric Brownian Motion used to forecast the value of Bank Size and GDP. The forecast value was substitute into Bank Profit Model to calculate the Return on Equity for each bank. From the results of the study, management of bank can have focused on Bank Size and Gross Domestic Product in order to gain more profit. Besides, the Return on Equity for Islamic banks in this study in a range of 3 percent to 23.82 percent.
format Article
author Basir, Nur Liyana
Ismail, Rashidah
author_facet Basir, Nur Liyana
Ismail, Rashidah
author_sort Basir, Nur Liyana
title Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail
title_short Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail
title_full Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail
title_fullStr Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail
title_full_unstemmed Predicting return on equity based on significant determinants for Islamic banks in Malaysia / Nur Liyana Basir and Rashidah Ismail
title_sort predicting return on equity based on significant determinants for islamic banks in malaysia / nur liyana basir and rashidah ismail
url https://ir.uitm.edu.my/id/eprint/81860/1/81860.PDF
https://ir.uitm.edu.my/id/eprint/81860/
_version_ 1772815642300252160
score 13.211869

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