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A study of Islamic and conventional banks in Malaysia

Many scholars have researched comparison of conventional and Islamic banking systems, with regards to their performance from time to time. This study compares their respective profitability in terms of volume and volatility of their deposits and loans in Malaysia in a six years period (2006-2011) th...

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Main Authors: Cheng, Fan Fah, Hassani, Abbas
Format: Article
Language:English
Published: Scientific Publishing Center, King Abdulaziz University 2014
Online Access:http://psasir.upm.edu.my/id/eprint/36285/1/A%20study%20of%20Islamic%20and%20conventional%20banks%20in%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/36285/
https://iei.kau.edu.sa/Pages-VOL-27-01.aspx
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spelling my.upm.eprints.362852020-07-06T03:05:14Z http://psasir.upm.edu.my/id/eprint/36285/ A study of Islamic and conventional banks in Malaysia Cheng, Fan Fah Hassani, Abbas Many scholars have researched comparison of conventional and Islamic banking systems, with regards to their performance from time to time. This study compares their respective profitability in terms of volume and volatility of their deposits and loans in Malaysia in a six years period (2006-2011) that other writers have not discussed in detail. The results in this study indicate that there are positive and significant relationships between volume of loans and volume of customers’ deposits and profitability of banks. However, volatility of loans and deposits does not have a significant impact on banks’ profit-efficiency in Malaysia. The results of this research also reveal that Malaysian conventional banks were more profitable than Islamic banks during the period of study. The ROA and ROE are significantly different and mean of ROA and ROE in conventional banks are higher than those in Islamic banks. The main contribution of banks’ profits comes from the spread between the interest earned on loans and the return payable on customer deposits. Both of these are internal factors. Volume of loans and volume of deposits are found to have significant influence on banks’ profitability. Therefore, managers and banks’ administrators should either focus their attention on these two determinants or adopt some kind of policies that will lead banks to increase their volume of loans and deposits to boost banks profitability level. Scientific Publishing Center, King Abdulaziz University 2014 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/36285/1/A%20study%20of%20Islamic%20and%20conventional%20banks%20in%20Malaysia.pdf Cheng, Fan Fah and Hassani, Abbas (2014) A study of Islamic and conventional banks in Malaysia. Journal of King Abdulaziz University: Islamic Economics, 27 (1). pp. 73-99. ISSN 7383-1018 https://iei.kau.edu.sa/Pages-VOL-27-01.aspx 10.4197/Islec. 27-1.3
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description Many scholars have researched comparison of conventional and Islamic banking systems, with regards to their performance from time to time. This study compares their respective profitability in terms of volume and volatility of their deposits and loans in Malaysia in a six years period (2006-2011) that other writers have not discussed in detail. The results in this study indicate that there are positive and significant relationships between volume of loans and volume of customers’ deposits and profitability of banks. However, volatility of loans and deposits does not have a significant impact on banks’ profit-efficiency in Malaysia. The results of this research also reveal that Malaysian conventional banks were more profitable than Islamic banks during the period of study. The ROA and ROE are significantly different and mean of ROA and ROE in conventional banks are higher than those in Islamic banks. The main contribution of banks’ profits comes from the spread between the interest earned on loans and the return payable on customer deposits. Both of these are internal factors. Volume of loans and volume of deposits are found to have significant influence on banks’ profitability. Therefore, managers and banks’ administrators should either focus their attention on these two determinants or adopt some kind of policies that will lead banks to increase their volume of loans and deposits to boost banks profitability level.
format Article
author Cheng, Fan Fah
Hassani, Abbas
spellingShingle Cheng, Fan Fah
Hassani, Abbas
A study of Islamic and conventional banks in Malaysia
author_facet Cheng, Fan Fah
Hassani, Abbas
author_sort Cheng, Fan Fah
title A study of Islamic and conventional banks in Malaysia
title_short A study of Islamic and conventional banks in Malaysia
title_full A study of Islamic and conventional banks in Malaysia
title_fullStr A study of Islamic and conventional banks in Malaysia
title_full_unstemmed A study of Islamic and conventional banks in Malaysia
title_sort study of islamic and conventional banks in malaysia
publisher Scientific Publishing Center, King Abdulaziz University
publishDate 2014
url http://psasir.upm.edu.my/id/eprint/36285/1/A%20study%20of%20Islamic%20and%20conventional%20banks%20in%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/36285/
https://iei.kau.edu.sa/Pages-VOL-27-01.aspx
_version_ 1672612182252060672
score 13.211869

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