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Please use this identifier to cite or link to this item: http://hdl.handle.net/1812/752

Title: The bank-specific and macroeconomic determinants of Islamic bank profitability: Some international evidence
Authors: Melaty Ghazali
Keywords: Islamic bank
Macroeconomic conditions
Bank profitability
Malaysian Islamic banks
Issue Date: Nov-2008
Publisher: University of Malaya
Abstract: Using bank data of 60 Islamic banks in 18 countries across the world, this research intends to investigate the impact of bank-specific characteristics and macroeconomic conditions on Islamic banks’ profits, during the period 2002 to 2007. The bank level data are obtained from BankScope database. This study employs regression models that relate bank profitability ratios to various explanatory variables. In this study, three ratios which represent profitability measures are return on assets (ROA), return on equity (ROE) and net non-interest margin (NIM). Seven variables are drawn from the conventional banking literature as proxies for bank-specific and macroeconomic factors. The results from this study indicate that the main determinants of Islamic banks’ profit are capital strength and efficiency factors, although the latter is negatively correlated to profitability. This study also found a positively significant relationship between profitability measures of Islamic banks and macroeconomic variables such as GDP growth and inflation. The findings revealed that the determinants of Islamic banks profitability are similar to those of the conventional banks’. The similarity of determinants is a strong indicator that many of the tools and techniques used in conventional banking are potentially suitable for an Islamic banking environment. In conclusion, it is hoped that this study could provide not only bank managers, but also the governments of Islamic countries, with a better understanding and a guideline to enhance the financial positions of Islamic banks. This is important since Islamic banks play a vital role in the current global economic crisis.
Description: Dissertation (M.B.A.) -- Faculty of Business and Accountancy, University of Malaya, 2008.
URI: http://dspace.fsktm.um.edu.my/handle/1812/752
Appears in Collections:Masters Dissertations : MBA

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