Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
This paper examines the factors affecting credit risk, being the main risk faced by banking institutions and systematically identifies the key factors influencing credit risk formations in Islamic banking operations in Malaysia. A comparison of these factors between Islamic and conventional bank...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Kolej Universiti Islam Malaysia
2012
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| Subjects: | |
| Online Access: | http://ddms.usim.edu.my/handle/123456789/5298 |
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| Summary: | This paper examines the factors affecting credit risk, being the main
risk faced by banking institutions and systematically identifies the key
factors influencing credit risk formations in Islamic banking operations
in Malaysia. A comparison of these factors between Islamic and
conventional banking operations is highlighted. Several policy
implications are addressed to promote risk management culture in
Islamic banking industry. The findings show that management
efficiency, risk-weighted asset and size of total assets have significant
influence on credit risk of Islamic banking, while conventional banking
credit risk are significantly affected by loan exposure to risk sectors,
regulatory capital, loan loss provision and risk-weighted assets. While
both systems observe similar effects of leverage, funding cost, risk-weighted
on credit risk Islamic banks experience different impact of
management efficiency regulatory capital and loss provisions on their credit risk as compared to that of conventional banks. |
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