Islamic banks profitability Net incomeAverage total assets Bankscope Bank

Islamic banks profitability net incomeaverage total

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Islamic banks profitability Net income/Average total assets (%) Bankscope Bank-Specific Determinants Financing ratio financing amount /deposit amount Financial statement + Capital ratio Total capital / asset amount Financial statement +/- Financing loss provision Total allowance for financing losses Financial statement +/- Asset quality Non-current ratio of financing amount Financial statement +/- Liquidity ratio Financing (or deposit) per asset amount. Financial statement + Financing risk Risk weighted asset ratio (RWA) per asset amount Financial statement +/- Monetary Policy Determinants Interest rate Annual interest rate BNM +/- Islamic interbank rates Islamic interbank money market rates IIMM + Shariah-based government securities investment Islamic Government-Based Securities BNM + Macroeconomic Determinants GDP Growth GDP growth rate (%) SESRTCIC +/- Inflation Consumer prices index (%) SESRTCIC + Unemployemnt Unemployment rate (%) SESRTCIC - Methodology To examine the impact of financing risk on Islamic banks profitability, this article employs the data panel technique. This technique pools the sample of observations in the cross section over a certain period of time. In panel data, the observations are indexed through N x T dimension. N is the number of firms (panels) and T is dimension of time series such as yearly, monthly or daily
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IJIRMPS | Volume 6, Issue 6, 2018 ISSN: 2349-7300 IJIRMPS1811003 Website : Email : [email protected] 22 (Brooks , 2008) . t=1, 2……., T of each i=1, 2,…., N cross -section observations in the sample. The panel data model fits this study because it can analyse changes at the bank level which cannot be done in either cross-section or time series models. Furthermore, using this technique can also reduce the multicolinearity problem and provide a larger degree of freedom. These two can be achieved because the technique increase the number of data points (Nerlove, 2002). IV. Data The study makes use of secondary data collected from various sources. The principal data source is the individual Islamic ban ks’ financial statements as submitted to the Central Bank of Malaysia for supervisory purposes. Complementary sources include Islamic Interbank Money Market (Islamic Interbank Money Market, 1994-2015), the Global Market Information Database (GMID, 1994- 2015), the World Bank's Annual Report through the International Monetary Fund (IMF), Statistical, Economic and Social Research and Training Center for Islamic Countries (SESRTCIC, 1994-2015) and Asian Development Bank (Asian Development Bank, 1994-2015). The data set consists of an unbalanced panel of all 17 full-fledged Islamic Commercial Banks operating in Malaysia, observed over a period of twenty-one years (1994-2015). The number of full-fledged Islamic banks is presented in Table II. Table II: Number of Islamic Banks No. Islamic banks Ownership Period 1 Bank Islam Malaysia Berhad Local 1994-2015 2 Bank Muamalat Malaysia Berhad Local 1994-2015 3 Maybank Islamic Berhad Local 1994-2015 4 RHB Islamic Bank Berhad Local 1994-2015 5 EONCAP Islamic Bank Berhad Local 1994-2015 6 Hong Leong Islamic Bank Berhad Local 1994-2015 7 CIMB Islamic Bank Berhad Local
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