Islamic Banking Profitability: Roles played by Internal and External Banking Factors
Abstract Due to the uncertainties and slowdown in the global economy, Islamic banking is facing challenges that will affect its performance and profitability. Poor performances include high levels of credit risk, poor quality loans, limited or inadequate capitalization, operational efficiencies a...
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Universiti Sains Islam Malaysia
2017
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my.usim-152972017-09-27T08:42:26Z Islamic Banking Profitability: Roles played by Internal and External Banking Factors Nor Izzati Mohd Aziz Islamic banking, banks’ profitability, fixed effect model, banks performance, Malaysia. Abstract Due to the uncertainties and slowdown in the global economy, Islamic banking is facing challenges that will affect its performance and profitability. Poor performances include high levels of credit risk, poor quality loans, limited or inadequate capitalization, operational efficiencies and high level of credit risk will influence the profit of banks. The idea of this paper is to examine hoe internal and external factors affect the profitability of Islamic banks. This will be seen on how performance through bank size, asset quality, GDP, inflation and money supply attempts to address the banks’ profitability. 11 samples of banks with six year financial data are chosen to be analyzed in this research. The result is obtained by applying panel data analysis, using the probability sample. It is expected that the findings of this study will show that the variety of internal and external factors will lead to banks profitability. If the Islamic banks fully understand and able to determine the strength factors, will enhance the institutions’ profitability. Therefore, policy makers, financial analyst and investors may benefit from this research as the findings could be used as a guideline for them in analyzing the factors affecting the success of Islamic banks, thus will contribute to the high growth rate in these banks that are currently operating in Malaysia. A future research should include internal and external factors that will affect the profitability of banks such as liquidity risk, bank operational efficiency and capital efficiency. 2017-09-27T08:42:26Z 2017-09-27T08:42:26Z 2017-09 Article 1823-075X 0126-5954 http://ddms.usim.edu.my:80/jspui/handle/123456789/15297 en JMIFR vol.14 no.1 Jun 2017; Universiti Sains Islam Malaysia |
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Islamic banking, banks’ profitability, fixed effect model, banks performance, Malaysia. |
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Islamic banking, banks’ profitability, fixed effect model, banks performance, Malaysia. Nor Izzati Mohd Aziz Islamic Banking Profitability: Roles played by Internal and External Banking Factors |
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Abstract
Due to the uncertainties and slowdown in the global economy, Islamic banking is facing challenges that will affect its performance and profitability. Poor performances include high levels of credit risk, poor quality loans, limited or inadequate capitalization, operational efficiencies and high level of credit risk will influence the profit of banks. The idea of this paper is to examine hoe internal and external factors affect the profitability of Islamic banks. This will be seen on how performance through bank size, asset quality, GDP, inflation and money supply attempts to address the banks’ profitability. 11 samples of banks with six year financial data are chosen to be analyzed in this research. The result is obtained by applying panel data analysis, using the probability sample. It is expected that the findings of this study will show that the variety of internal and external factors will lead to banks profitability. If the Islamic banks fully understand and able to determine the strength factors, will enhance the institutions’ profitability. Therefore, policy makers, financial analyst and investors may benefit from this research as the findings could be used as a guideline for them in analyzing the factors affecting the success of Islamic banks, thus will contribute to the high growth rate in these banks that are currently operating in Malaysia. A future research should include internal and external factors that will affect the profitability of banks such as liquidity risk, bank operational efficiency and capital efficiency. |
| format |
Article |
| author |
Nor Izzati Mohd Aziz |
| author_facet |
Nor Izzati Mohd Aziz |
| author_sort |
Nor Izzati Mohd Aziz |
| title |
Islamic Banking Profitability: Roles played by Internal and External Banking Factors |
| title_short |
Islamic Banking Profitability: Roles played by Internal and External Banking Factors |
| title_full |
Islamic Banking Profitability: Roles played by Internal and External Banking Factors |
| title_fullStr |
Islamic Banking Profitability: Roles played by Internal and External Banking Factors |
| title_full_unstemmed |
Islamic Banking Profitability: Roles played by Internal and External Banking Factors |
| title_sort |
islamic banking profitability: roles played by internal and external banking factors |
| publisher |
Universiti Sains Islam Malaysia |
| publishDate |
2017 |
| url |
http://ddms.usim.edu.my:80/jspui/handle/123456789/15297 |
| _version_ |
1645153884774072320 |
| score |
13.211869 |