Performance and Profitability of Islamic Banks in Saudi Arabia: An Empirical Analysis

Javaid, Saima; Alalawi, Suha

doi:10.18488/journal.aefr.2018.81.38.51

Cited by 39 publications

(45 citation statements)

References 27 publications

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“…The panel regression results (see table 3 and 4) of exchange rate represent that it is positive and significant suggesting that a higher exchange rate may considerably increase the profitability of Bruneian Islamic banks. These findings are parallel with Javaid and Alalawi (2017) and Habib and Islam (2017), these studies found that exchange rate is significant in determining the profitability and stock prices of Islamic banks. It contradicts Nahar and Sarker (2016) study which revealed that exchange rate has a negative impact on Islamic banks' profitability hence; hypothesis 4 of this study is accepted.…”

Section: Panel Regression Analysissupporting

confidence: 76%

Impact of Macroeconomic Variables on Islamic Banks Profitability

Ali

Maamor

Yaacob

et al. 2018

IJBEG

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The main objective of this study is to understand and determine the impact of macroeconomic variables on Islamic banks’ profitability in Brunei. The impact of GDP growth rate, inflation, interest rate, exchange rate, oil prices, competition and money supply on Bank Islam Brunei Darussalam (BIBD) profitability was determined from the year 2012 to the year 2016. The secondary data was obtained from DEPD, AMBD and IMF annual reports. The collected data was analysed using Stata 15. The fixed effects panel regression technique was adopted to measure the impact of each variable on Islamic banks’ profitability. The findings revealed that GDP growth rate, inflation, exchange rate, oil prices and money supply have a significant positive impact on profitability. The findings further revealed that oil prices, GDP and inflation were the most significant and exchange rate and money supply were the least significant determinants of profitability. The findings suggest the regulators and policy makers to discover alternative resources to rejuvenate economic and financial system. Islamic bankers may revamp its marketing strategies to reduce the intensity of macroeconomic variables. This study has vigorously contributed in the existing literature of single country analysis of Islamic banks particularly in the context of Brunei.

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Section: Panel Regression Analysissupporting

confidence: 76%

Impact of Macroeconomic Variables on Islamic Banks Profitability

Ali

Maamor

Yaacob

et al. 2018

IJBEG

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“…ROA is calculated by dividing net income on total assets that give the ratio of income generated from invested capital. The higher the ROA, the more profitable the bank is like (Javaid & Alalawi, 2018), (Ch, 2017), (Nahar & Prawoto, 2017), (Chou & Buchdadi, 2016), (Banks, Karim, Musa, & Jaafar, 2018).…”

Section: Return On Assets (Roa)mentioning

confidence: 99%

“…So the amount of capital owned by the bank allegedly affect profitability. Bank size is measured by Total Assets (Al-tamimi, 2010) dan (Javaid & Alalawi, 2018).…”

Section: Bank Sizementioning

confidence: 99%

Debt And Equity-Based Financing, Size And Islamic Banks Profitability: Empirical Evidence From Indonesia

2019

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Islamic Banking as a financial institution functions to collect and distribute funds to the public. To carry out these functions, the capital structure scheme uses debt and equity based financing. In addition, the implementation is also influenced by the size which ultimately affect the performance of Islamic banking. This study aims to examine debt and equity-based financing, size and Islamic banks profitability: empirical evidence from Indonesia. The research method used is model estimation test of Moderated Regression Analysis (MRA) to see size as moderation variable. Banks profitability is represented by ROA and ROE. This study uses Islamic bank panel data from financial reports published during the sample period covering 2008-2017. The empirical findings show that debt and equity-based financing affect banks profitability. Furthemore, bank size does not moderate the debt and equity-based financing relationship to Islamic banks profitability.

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“…First, efficiency is measured by comparing Operational Expense to Operational Income (BOPO) which would not affect the performance of Islamic banks in Indonesia, since the source of income is not only financing, but the income of the services provided by Islamic banks also contributes greatly to the profitability of Islamic banks. Research by Javaid and Alalawi (2018) concludes that operating expenses negatively affect profitability. Competitive financial institutions generally have small efficiency meaning that they have low expenses to optimize output (Alexiou & Sofoklis, 2009).…”

Section: The Relationship Between the Independent Variables And The Dmentioning

confidence: 99%

Determinants of Islamic Bank Profitability: Evidence from Indonesia

Sukmaningrum

Pirzada

Rusmita

et al. 2020

J. Fin. Bank. Review

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Objective – Islamic Banks have a distinct advantage that is not only conduct a commercial operation, but to also conduct social operations. Therefore, Islamic Banks plays an important role in developing the Indonesian economy. The aim of this study is to investigate the impact of internal and external factors that affect the profitability of Islamic Banks in Indonesia. Methodology/Technique – The methodology of this research is multiple regression. The object of this research is the Islamic banking industry in Indonesia. Internal factors include size, liquidity, asset quality, management, and efficiency ratio. External factors include interest rate and inflation. Return on Assets is used to measure profitability. The monthly data is collected from the financial reports of Islamic Banks between 2011 to 2016. Findings – The findings show that size, liquidity, assets quality, management ratio, interest rate and inflation lead to a greater Return on Assets (profitability) in Islamic Banks in Indonesia. Efficiency however does not have a significant effect on profitability of Islamic Banks in Indonesia. Novelty – Based on the results of this research, it can be concluded that the Islamic banking industry can use those variables to improve the profitability of Islamic banks in the future. In addition, there are two variables that affect the profitability of Islamic banking industry. For the Islamic banking industry should anticipate the movement of inflation and interest to improve the profitability of Islamic banks. Type of Paper: Empirical paper. Keywords: Islamic Banks; Profitability; Internal Factors; External Factors; Indonesia. Reference to this paper should be made as follows: Sukmaningrum, P.S; Pirzada, K; Rusmita, S.A; Hasib, F.F; Widiastuti, T; Hendratmi, A. 2020. Determinants of Islamic Bank Profitability: Evidence from Indonesia, J. Fin. Bank. Review, 5 (1): pp. 01 – 13 https://doi.org/10.35609/jfbr.2020.5.1(1) JEL Classification: G21, G24.

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Performance and Profitability of Islamic Banks in Saudi Arabia: An Empirical Analysis

Abstract: Article History

Cited by 39 publications

References 27 publications

Impact of Macroeconomic Variables on Islamic Banks Profitability

Impact of Macroeconomic Variables on Islamic Banks Profitability

Debt And Equity-Based Financing, Size And Islamic Banks Profitability: Empirical Evidence From Indonesia

Determinants of Islamic Bank Profitability: Evidence from Indonesia

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