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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: Nor Hayati Ahmad, Shahrul Nizam Ahmad
Format: Article
Language:English
Published: Kolej Universiti Islam Malaysia 2012
Subjects:
Banking institutions
Credit risk
Islamic banking
Online Access:http://ddms.usim.edu.my/handle/123456789/5298
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spelling my.usim-52982015-03-02T02:22:19Z Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case Nor Hayati Ahmad Shahrul Nizam Ahmad Banking institutions Credit risk Islamic banking 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. 2012-02-16T07:00:23Z 2012-02-16T07:00:23Z 2004 Article 1823075X http://ddms.usim.edu.my/handle/123456789/5298 en Vol 1, No.1 2004; Kolej Universiti Islam Malaysia
institution Universiti Sains Islam Malaysia
building USIM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universit Sains Islam i Malaysia
content_source USIM Institutional Repository
url_provider http://ddms.usim.edu.my/
language English
topic Banking institutions
Credit risk
Islamic banking
spellingShingle Banking institutions
Credit risk
Islamic banking
Nor Hayati Ahmad
Shahrul Nizam Ahmad
Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
description 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.
format Article
author Nor Hayati Ahmad
Shahrul Nizam Ahmad
author_facet Nor Hayati Ahmad
Shahrul Nizam Ahmad
author_sort Nor Hayati Ahmad
title Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
title_short Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
title_full Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
title_fullStr Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
title_full_unstemmed Key Factors Influencing Credit Risk of Islamic Bank: a Malaysian Case
title_sort key factors influencing credit risk of islamic bank: a malaysian case
publisher Kolej Universiti Islam Malaysia
publishDate 2012
url http://ddms.usim.edu.my/handle/123456789/5298
_version_ 1645151637310799872
score 13.222552

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